Stocks Lower into Final Hour, Weighed Down by Tech

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Software longs, Internet longs and Computer longs. I added to my (IWM)/(QQQQ) hedges on the slightly higher open this morning and then covered some of them and some of my (EEM) short this afternoon, thus leaving the Portfolio 75% net long. The overall tone of the market is negative today as the advance/decline line is lower, most sectors are falling and volume is heavy. Investor anxiety is above-average. I am seeing some positive developments. Banks are now 1% higher, and the Broker/Dealer Index is about even. Market leaders are cutting losses. The NYSE reported recently that short interest on the exchange rose another 2.4% the last two weeks of October. Here are the 25 stocks with the largest percentage increases in their short interest relative to their float over that time period:

1. XJT +13.3%
2. RDN +9.2%
3. PFB +9.0%
4. VMW +9.05
5. CMG +8.7%
6. HAR +7.8%
7. SPF +7.7%
8. SCA +6.8%
9. HCR +5.7%
10. IMB +5.4%
11. ABK +5.2%
12. WCI +5.0%
13. MTG +4.9%
14. NDN +4.8%
15. CFC +4.7%
16. HOS +4.6%
17. DSL +4.5%
18. UA +4.5%
19. ETH +3.9%
20. MIR +3.9%
21. MGI +3.8%
22. USG +3.7%
23. EMS +3.7%
24. FED +3.5%
25. CEC +3.5%

It is also noteworthy that short interest on the Amex rose 4.2% over the last two weeks of October, led by a 20,582,364 share increase in short interest in the Financial Sector Select SPDR (XLF). The XLF is now has the second largest short position on the exchange behind the SPDRs (SPY). I expect US stocks to trade modestly higher into the close from current levels on bargain-hunting and short-covering.