Stocks Sharply Lower into Final Hour on Rising Energy Prices, AT&T Comments and Financial Sector Weakness

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Medical longs, Software longs and Internet longs. I have not traded today, thus leaving the Portfolio 75% net long. The overall tone of the market is negative today as the advance/decline line is lower, sector performance is mostly negative and volume is above average. Investor anxiety is above average again. Today’s overall market action is bearish. The ISE Sentiment Index hit a very depressed 46.0 this morning, near the historic low of 36.0 that occurred on July 3, 2006. The S&P 500 rose 16.3% over the next 8 months. The fact that negative news is still having such an impact on the broad market is a near-term negative. I still think we are very close to a meaningful bottom, however. Current weakness is providing very attractive entry points for long-term growth stock investors, in my opinion. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and bargain hunting.

Today's Headlines

Bloomberg:
- Copper is jumping 5% to a seven-week high, leading a commodity rally, on speculation global demand for raw materials won’t slacken.
- GM, the world’s largest automaker, is keeping pace with Toyota Motor in developing vehicles powered by alternative-energy sources, CEO Rick Wagoner said.
- Renaissance Technologies and JPMorgan Chase, the world’s biggest hedge fund managers, trailed rivals in 2007 as stock-pickers with few assets sidestepped losses caused by the collapse of subprime mortgages.
- Scientists have begun competing for the first US government grants to investigate a stem cell breakthrough that may lead to new treatments for diabetes, heart disease and brain disorders and avoids destroying human embryos.
- Qualcomm Inc.(QCOM) CEO Paul Jacobs said demand for mobile phones was strong over the year-end holiday shopping season.

Wall Street Journal:
- Chrysler Aims to Double Overseas Sales.
- Cisco Technology Focuses on Social Networking Trend.
- Sony to Emphasize Innovation, High-Def Devices.
- Is Even-Higher Definition Next Big Thing for TVs?

NY Times:
- Comcast Plans to Offer a Huge Menu of Films.

Barron’s:
- Seagate(STX) Not Seeing Slowing In Europe Or Asia, CEO Watkins Says.

Washingtonpost.com:
- Qualcomm(QCOM) Unveils UltraMobile PC.

Morningstar.com:
- GM(GM) to Unveil Hydrogen-Elec Cadillac Crossover Concept Vehicle.

Handelszeitung:
- UBS AG CEO Marcel Rohner expects the crisis in the US credit market to stabilize. UBS has valued its investments “adequately” and has “substantially” reduced its risk, Rohner said.

Bear Radar

Style Underperformer:

Small-cap Value (-1.12%)

Sector Underperformers:

Airlines (-4.26%), I-Banks (-2.53%) and Banks (-2.10%)

Stocks Falling on Unusual Volume:

GBX, SVU, AKNS, PANL, VSAT, FEIC, MEAS, CITP, ORLY, UNFI, MASI, UAUA, RYAAY, MATK and MTG

Nov. Pending Home Sales Decline, Oct. Revised Higher

- Pending Home Sales for November fell 2.6% versus estimates of a .7% decline and an upwardly revised 3.7% gain in October.

BOTTOM LINE: The number of Americans signing contracts to buy previously owned homes fell more than forecast in November, Bloomberg reported. Pending home sales fell 13% in the Northeast, 4.1% in the Midwest and 2.1% in the West. Sales rose 2.3% in the South. The larger rise in October than previously estimated suggests the market may be stabilizing, said Lawrence Yun, the group’s chief economist. “Although there could be some minor slippage in the first quarter, existing home sales should hold in a narrow range before trending up,” Yun said. I suspect home sales are finally stabilizing and will bounce back a bit this quarter on pent-up demand and diminishing credit market angst.

Bull Radar

Style Outperformer:

Small-cap Growth(+.95%)

Sector Outperformers:

Biotech (+2.55%), Drugs (+2.31%) and Steel (+2.06%)

Stocks Rising on Unusual Volume:

APL, HNT, PZE, RPM, GRR, NSH, SEH, KG, VRUS, ISIS, ITMN, QMAR, HWAY, SBUX, AMSG, WBSN, HELE, HRBN, INCY, SHPGY, AVCT, LEAP, ALXN, PERY, TISI, PPDI, SIGM, PGNX, KGC, SSRI, TNE, BRP, PBR, WYE, SGP, DIVX, ICE, SWS, UBS and ACGL

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