Stocks Finishing Mostly Lower on Global Growth Worries, Record Energy Prices

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Internet longs, Computer longs and Commodity shorts. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is mildly lower, sector performance is mixed and volume is above average. Investor anxiety is high. Today’s overall market action is mildly bearish. The VIX is falling 3.97% and is above average at 24.89. The ISE Sentiment Index is below average at 133.0 and the total put/call is high at 1.17. Finally, the NYSE Arms has been running below average most of the day and is currently .81. The Euro Financial Sector Credit Default Swap Index is down 1.82% today to 93.71 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 TED spread is falling 3.1% to .95. The AAII % Bulls fell to 23.93% this week and the % Bears fell to 52.14%. Pessimism is exceptionally bearish once again. The strong US dollar rally is a big positive. I expect it to build on today’s gains next week. Nikkei futures indicate an +95 open in Japan and DAX futures indicate an +47 open in Germany tomorrow. I expect US stocks to trade mixed-to-lower into the close from current levels on global growth worries and record energy prices. I hope everyone has a good holiday weekend. Thanks for reading.

Bull Radar

Style Outperformer:

Large-cap Value (+.55%)

Sector Outperformers:

Road & Rail (+2.18%), Airlines (+1.58%) and Internet (+1.19%)

Stocks Rising on Unusual Volume:

TKC, AIXG, AZN, GSK, SU, VIP, SI, XOM, MPS, AGP, PXP, APC, CHDX, WDFC, OSIR, AAUK, AVID, CHFC, AVCT, WERN, SHLM, AMGN, PSMT, OMRI, CBRL, GTLS, CELG, ASTE, ASML, WGOV, UFCS, FAST, BSY and AZN

Stocks With Unusual Call Option Activity:

1) VCLK 2) PENN 3) MET 4) URS 5) JEF

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Thursday Watch

Late-Night Headlines
Bloomberg:
- Brazil’s Bovespa stock index may drop on further declines in commodity prices, according to Citigroup Inc. strategists. “By far the biggest long-term risk for Latin American equities is a collapse in commodity prices,” Citigroup strategists including Geoffrey Dennis wrote.
- Pessimism about US stocks increased in the past week to match the highest level of the year. The proportion of bearish newsletter writers climbed 5.4 points to 44.7 percent during the week ended yesterday, according to a survey released today by New Rochelle, New York-based Investors Intelligence. That was equal to the 2008 high in the week ended March 18, when the Standard & Poor's 500 Index began a 12 percent rebound from its lows of the year. Optimism about U.S. stocks dropped for a fourth week, with bullish stock advisers retreating 1.8 point to 31.9 percent. The proportion predicting a correction, or 10 percent plunge in benchmark indexes, fell to 23.4 percent from 27 percent, Investors Intelligence said.
- The LA Times announced plans to cut 250 jobs, including 150 positions in news, in an effort to bring costs into line with declining revenue. The publication also plans to reduce the number of pages it publishes each week by 15%. The cuts in editorial amount to 17% of the newsroom staff.
- Platinum and palladium fell after U.S. auto sales fell in June, fueling concerns that demand for the metals used in car parts will slow. ``We are becoming increasingly concerned about China slowing and its impact on metal demand,'' John Reade, the head of UBS AG metals strategy in London, said in an e-mailed note. ``In an interesting e-mail conversation with the head of trading at a major Chinese precious metals company over the weekend, weakness in the equity market was cited as one of the main factors behind a sharp turn down in appetite for precious metals in China in the past couple of months.''
- Nvidia Corp.(NVDA), the second-biggest maker of computer-graphics chips, plunged 20 percent in extended trading after cutting its second-quarter sales forecast because of a drop in demand and increased competition.
- The Nikkei 225 Stock Average's longest losing streak in 43 years belies its top performance among Asia's biggest equity markets as investors bet the end of deflation will lift the economy and spur demand for equities.

Wall Street Journal:
- Yahoo! Inc.(YHOO) is talking to Time Warner Inc.(TWX) about a possible combination as Microsoft Corp. weighs another bid for the Internet company.

CNBC.com:
- Will Europe Make Things Worse for Investors?

CNNMoney.com:
- Bye-bye gas subsidies. Could higher gasoline prices in China and India mean lower prices here in the US?

The Deal.com:
- Job Watch: Hedge funds hiring.

TimesOnline:
- The mastermind of America’s largest hedge fund scam surrenders to police after faking his own death to avoid jail.

South China Morning Post:
- A mainland think-tank has forecast that inflation will reach 7% or higher this year, well beyond Beijing’s target, and is advising the central government to stick to its tight monetary policy.

Xinhua:
- Chinese exporters face emerging problem of defaulted payments.

Late Buy/Sell Recommendations
- None of note

Night Trading
Asian Indices are -2.0% to unch. on average.
S&P 500 futures +.05%.
NASDAQ 100 futures -.38%.

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Earnings of Note
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- None of note

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The Change in Non-farm Payrolls for June is estimated at -60K versus -49K in May.
- The Unemployment Rate for June is estimated to fall to 5.4% versus 5.5% in May.
- Average Hourly Earnings for June are estimated to rise .3% versus a .3% increase in May.
- Initial Jobless Claims for this week are estimated to rise to 385K versus 384K the prior week.
- Continuing Claims are estimated to fall to 3125K versus 3139K prior.

10:00 am EST:
- ISM Non-Manufacturing for June is estimated to fall to 51.0 versus 51.7 in May.

Other Potential Market Movers
- The weekly EIA natural gas inventory report could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and automaker shares in the region. I expect US equities to open modestly lower and to maintain losses into the close. The Portfolio is 75% net long heading into the day.

Stocks Finish at Session Lows, Weighed Down by Commodity, Airline, Road & Rail, Construction Shares

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In Play

Stocks Sharply Lower into Final Hour on Surging Oil, Rising Global Growth Worries

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Alternative Energy longs and Software longs. I added (IWM)/(QQQQ) hedges and added to my (EEM) short today, thus leaving the Portfolio 75% net long. The tone of the market is very negative as the advance/decline line is substantially lower, most sectors are falling and volume is above average. Investor anxiety is high. Today’s overall market action is bearish. The VIX is rising 7.1% and is now high at 25.3. The ISE Sentiment Index is below average at 112.0 and the total put/call is above average at 1.01. Finally, the NYSE Arms has been running high most of the day and is currently 1.68. The Euro Financial Sector Credit Default Swap Index is down .95% today to 95.29 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. . However, the TED spread is rising 5.96% to .98. Due to recent market volatility, I am unable to blog as much as normal. Sorry for the inconvenience. Nikkei futures indicate a -56 open in Japan and DAX futures indicate an +16 open in Germany tomorrow. I expect US stocks to trade modestly lower into the close from current levels on surging oil, record short-selling and rising global growth worries.