Stocks Lower into Final Hour on Financial Sector Worries, Higher Oil

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Internet longs, Medical longs and Computer longs. I covered all my (QQQQ)/(IWM) hedges and then added them back today, thus leaving the Portfolio 75% net long. The tone of the market is mildly negative as the advance/decline line is slightly lower, most sectors are declining and volume is above average. Investor anxiety is high. Today’s overall market action is mildly bearish. The VIX is rising 7.03% and is high at 27.39. The ISE Sentiment Index is very low at 81.0 and the total put/call is high at 1.11. Finally, the NYSE Arms has been running above average most of the day and is currently 1.14. The Euro Financial Sector Credit Default Swap Index is falling 2.71% today to 90.09 basis points. This index is up from a low of 52.66 on May 5^th, but down from 129.46 basis points on March 20^th. The North American Investment Grade Credit Default Swap Index is unch. today to 143.50. The TED spread is rising 7.48% to 1.21. Nikkei futures indicate a -189 open in Japan and DAX futures indicate an +67 open in Germany on Monday. I expect US stocks to trade modestly higher into the close from current levels on short-covering and bargain-hunting.