Stocks Finish Mostly Lower, Weighed Down by Tech, Retail, Airline and Financial Shares

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Stocks Mostly Lower into Final Hour on Rise in Commodities, Long-term Rates

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Medical longs, Internet longs, Semi longs and Commodity shorts. I added (IWM)/(QQQQ) hedges and took a loss on my (OMCL) long today, thus leaving the Portfolio 75% net long. The overall tone of the market is mildly negative as the advance/decline line is slightly lower, most sectors are declining and volume is below average. Investor anxiety is above average. Today’s overall market action is bearish. The VIX is rising 4.2% today to a high 26.1. The ISE Sentiment Index is a below average 110.0 and the total put/call is an above-average .99 today. Tech, retail, financials and airlines are under pressure today from the rise in commodities and long-term rates. The rise in commodities is boosting inflation worries, at a time of significant economic concern, which is a large negative. Investors are worried that this may prevent an otherwise more aggressive response to the ongoing housing/credit problems from the Fed. The odds of a 75 basis point cut at the March 18^th meeting are down to 2% today from 32% on Friday. If the commodity rise continues, I would expect to begin to hear slightly more hawkish Fed commentary. The decline in my (SIGM) long looks like a severe overreaction to today’s Robert Baird downgrade of the stock to Neutral and $50 target, however I have not added to the position yet. Nikkei futures indicate a -100 open in Japan and DAX futures indicate a -7 open in Germany. I expect US stocks to trade mixed-to-higher into the close from current levels on bargain-hunting and short-covering.

Today's Headlines

Bloomberg:
- Confidence among US homebuilders rose for a second straight month, the first back-to-back increase in almost a year, as signs emerged that lower house prices attracted more buyers.
- The Herzfeld Caribbean Basin Fund, which aims to profit from the resumption of US trade with Cuba, surged the most in its 13-year history after Fidel Castro resigned as the country’s president and commander-in-chief.
- Verizon Wireless(VZ) is offering a flat-rate subscription for unlimited calls, intensifying price competition with rivals Sprint Nextel(S) and AT&T(T).
- If Exxon, (XOM), Corning(GLW) Earn So Much, How Can S&P Be Cheap?
- Lansdowne Partners Ltd. and LNG Capital LLP were among investors that profited from an “easy” bet over the past year on the 93% decline in Northern Rock Plc, the bank being nationalized by the British government.
- Mortgage companies including Fannie Mae(FNM) and HSBC Finance jointed a US Treasury Dept.-led effort to offer 30-day foreclosure freezes to give delinquent borrowers more time to arrange payment plans. Remaining members of the Hope Now alliance adopted the initiative announced last week by Treasury Secretary Henry Paulson and six banks, including JPMorgan Chase(JPM) and Citigroup(C), the group said.
- Crude oil is surging above $99/bbl. in NY on record investment fund speculation after the dollar weakened, Iran said OPEC would likely cut production and a refinery fire in Texas curbed gasoline production.

Wall Street Journal:
- As Oil Prices Soar, Prospectors Return To Pennsylvania.
- Disney(DIS), Viacom(VIA) and Others Take Videogames In-House, Seeking Cut of Hot Market.
- Sweet Home, Santiago: Cuba’s Ethanol Future.

AppleInsider:
- Apple(AAPL) taps Linkin Park to perform at "secret" NYC event.

Finansavisen:
- Saudi Aramco CEO Abdallah Jum’ah said the so-called “peak oil” theory is a myth. Saudi Aramco plans to boost oil production capacity to 12 million barrels a day in 2009 from about 10 million barrels a day in 2004 by developing new fields and increasing output at existing fields.

Seoul Economic Daily:
- South Korean companies may win oil-exploration rights in Iraq, citing a South Korean official. Companies including Korea National Oil Corp. may be able to develop oil fields with combined reserves of about 3 billion barrels in the Kurdish-controlled region of Iraq, under an initial agreement with Iraqi Kurdish Prime Minister Nechirvan Barzani.

Bear Radar

Style Underperformer:

Small-cap Value +.40%

Sector Underperformers:

Telecom (-3.22%), I-Banks (+1.39%) and Airlines (-1.02%)

Stocks Falling on Unusual Volume:

ALJ, ONXX, TONE, USTR, DDUP and SIGM

Bull Radar

Style Outperformer:

Mid-cap Growth (+1.21%)

Sector Outperformers:

Steel (+4.98%), Oil Service (+3.3%) and Construction (+2.2%)

Stocks Rising on Unusual Volume:

HOC, BCS, WNR, KALU, SWC, TM, PBR, NMR, JOE, BBW, MICC, VIP, NTES, TITN, QDEL, KALU, JAKK, TRMA, SHPGY, SHOO, FOSL, RBCN, FEED, APPX, FNDT, GMXR, IMCL, FARO, SSRI, DRYS, ROCK, ASTE, OCNF, SID, B, GNI, MSB and OMX

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