Tuesday, November 27, 2007

Stocks Higher into Final Hour on Falling Oil and Financial Sector Strength

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Semi longs, Medical longs, Biotech longs and commodity shorts. I covered some of my (EEM) short and my (IWM)/(QQQQ) hedges this morning, thus leaving the Portfolio 100% net long. The overall tone of the market is positive today as the advance/decline line is slightly higher, most sectors are rising and volume is above average. Investor anxiety is above average. The NYSE reported last Wednesday that total short interest on the exchange rose another 3.8% over the first two weeks of the month, to 12.38 billion shares. Moreover, short interest on the Amex, where many ETFs trade, jumped 11.9%. Short interest in the Financial Select Sector SPDR (XLF) rose by 18,739,906 shares, to 116,045,478 shares. It is still the second most heavily shorted security on the exchange and the most heavily shorted sector ETF. The (XLF) is rising 1.6% on today’s Citigroup news. Breadth is weaker than I would like to see and we have given back too much of today’s earlier gains. I expect US stocks to trade mixed into the close from current levels as financial sector strength and lower energy prices offset global economic concerns.

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