Stocks Lower into Final Hour, Weighed Down by Tech and Commodity Shares

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Semi longs, Software longs and Medical longs. I have not traded today, thus leaving the Portfolio 75% net long. The overall tone of the market is mildly negative today as the advance/decline line is slightly lower, sector performance is mixed and volume is heavy. Investor anxiety is above average. Today’s overall market action is bearish. Many market leading tech and cyclical shares, with the largest gains last year, remain under pressure today, substantially underperforming the broad market. Many true growth stocks are rapidly approaching very attractive entry points on the long side for investors, in my opinion. Economic pessimism is extraordinarily high given recent data. Many pundits that have proclaimed for years that the US faced an imminent recession are now saying that the economy is already in one and that it will be a very bad one. I suspect that if the US economy were to head into recession in the future these same pundits would then start calling for a depression. In the current "US negativity bubble" it seems their dire forecasts are so easily believed. I continue to see little evidence of an outright recession in the data even as this is currently being priced into stocks at current levels. On the positive side, the TED spread is falling another 13 basis points today to 131 basis points. This is down 109 basis points from August highs and down 92 basis points from highs hit three weeks ago. I expect US stocks to trade mixed-to-lower into the close from current levels on more shorting and rising economic pessimism.

Today's Headlines

Bloomberg:
- The risk of companies defaulting on their debt fell amid speculation the Federal Reserve will cut interest rates further, trading in credit-default swaps show.
- Crude oil is falling more than $2 barrel, the most since November, on expectations demand will drop, a firmer US dollar and warmer weather.
- The fastest-growing bet in the oil market these days is that the price of crude will double to $200 a barrel by the end of the year.
- The US dollar rose for the first time this year versus the yen and gained against the euro on speculation global growth may withstand a slowing US economy.
- Three US Navy warships were briefly confronted by five Iranian “fast boats” yesterday in the Persian Gulf, a Defense Dept. spokesman said.

Wall Street Journal:
- McDonald’s(MCD) Takes On A Weakened Starbucks(SBUX).
- Could GM’s(GM) Salvation Be Stuff of Science Fiction.
- Comcast(CMCSA) Devices Aim to Simplify TV Watching.
- The level of crisis in the securities and investment banking industry is at its highest since records began, according to the Financial News annual Crisis Index.

NY Times:
- CNBC and the NY Times(NYT) will share material on their Web sites starting today to compete with the Wall Street Journal and the Fox Business Network.
- Peter Hopkins, a civic-minded and idealistic 2004 Harvard grad, is hoping that his new Web site, Big Think, will do for intellectuals what YouTube, the popular video-sharing site, did for bulldogs on skateboards.

AppleInsider:
- Apple(AAPL) is closing in on agreements with almost all the major motion picture studios for an iTunes movie rental service that will serve up 24-hour rentals for $3.99 a pop.

AP:
- Comcast Corp.(CMCSA) and Time Warner Inc.(TWX) will allow electronics manufacturers to standardize televisions and other devices so they will work with any cable provider, which may encourage the development of new services.

Financial Times:
- Plug-in cars are picking up speed and credibility.

Sentido Comun:
- Microsoft’s(MSFT) Bill Gates reclaimed the title of the world’s richest man from Mexican billionaire Carlos Slim.

Bear Radar

Style Underperformer:

Mid-cap Growth (-.72%)

Sector Underperformers:

Oil Tankers (-3.86%), Steel (-3.26%) and Computer Hardware (-2.79%)

Stocks Falling on Unusual Volume:

MTR, JEF, TXI, AVCT, WATG, EVVV, ININ, HRBN, OSIR, DDUP, LIFC, CNQR, HIBB, TSCM, OVTI, OPLK, OREX, ALXN, SIGM, EQIX, CNB, SIRF and DPTR

Bull Radar

Style Outperformer:

Large-cap Value(+.4%)

Sector Outperformers:

Drugs (+2.07%), Medical Equipment (+1.54%) and Telecom (+1.40%)

Stocks Rising on Unusual Volume:

ITMN, HWAY, DTSI, IRIS, ANGO, FFIN, AMMD, CLHB, CELG, FOSL, VIVO, SONC, PERY, SEPR, PHRM, HLEX, CRZO, NIHD, LSTR, FORR, IWA, MFW, LLY, GSK, FPL, AES, SPN, DLB, CELL, IVN, ME and SWSI

Economic Releases

- None of note

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