Stocks Lower into Final Hour as Commodity Shares Plunge

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Internet longs, Medical longs and Semi longs. I added to my (IWM)/(QQQQ) shorts and trimmed some existing longs this morning, thus leaving the Portfolio 50% net long. The tone of the market is negative as the advance/decline line is substantially lower, almost every sector is lower and volume is heavy. I am hearing some commodity bulls say today's drops are just another buying opportunity and that nothing has changed. I would argue that much has changed over the last year in the supply/demand equation and that perception has been the main thing propping up most commodity prices at extremely inflated levels. Is perception now changing? As I have stated before, I believe decelerating global growth, production near record high levels and a firm dollar will spur much larger declines in the CRB Index than most expect. This may temporarily pressure the broad market. However, falling commodity prices are one of the keys to my expectations for a 15% gain in U.S. stocks this year. I expect US stocks to trade mixed-to-higher into the close from current levels as falling commodity stocks are mostly offset by gains in most other sectors.