Stocks Lower into Final Hour on Global Growth Worries, Financial Sector Angst

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Alternative Energy longs, Retail longs, Computer longs and Medical longs. I added (QQQQ)/(IWM) hedges and added to my (EEM) short today, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is substantially lower, every sector is declining and volume is very light. Investor anxiety is above average. Today’s overall market action is bearish. The VIX is rising 10.7% and is still above-average at 20.82. The ISE Sentiment Index is below average at 127.0 and the total put/call is above average at 1.08. Finally, the NYSE Arms has been running very high most of the day, hitting 1.95 at its peak, and is currently 1.68. The Euro Financial Sector Credit Default Swap Index is falling .17% today to 86.83 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. at 141.65 basis points. The TED spread is rising 1.8% to 1.14 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is falling 3 basis points to 2.15%, which is down 48 basis points in about six weeks. The Russian RTS Index fell another 3.2% today, making a new 52-week low, and is now down 34.0% in less than three months. I still see further meaningful downside is those shares. Despite another spike in US financial sector worries and the recent bounce in oil, the US dollar continues to trade well and further upside in the currency is likely over the coming weeks after a period of consolidation. I am seeing a number of signs that much of today’s stock selling is forced, likely as a result of last week’s whipsaw action in commodities. Once again, volume remains very light on today’s sell-off, with a very high ARMs reading. This indicates that it won’t take much to lift stocks once the selling subsides. There were several companies that saw meaningful corporate insider buys last week. Here are a few: CINF, WPC, BBT, STI, MI, NGLS, AFG, GAP, CPN and ABMD. Piper Jaffray is saying today that NPD data suggest that Apple sold 11 million iPod units versus street estimates of 10.8 million. As well, they believe Apple sold 2.9 million Macs versus street estimates of 2.65 million. I still think Apple is consolidating before another large move higher into year-end. Nikkei futures indicate a -208 open in Japan and DAX futures indicate a -19 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering and bargain-hunting.