Stocks Higher into Final Hour on Falling Energy Prices and Declining Inflation Worries

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Biotech longs, Retail longs and Internet longs. I added to my (ISRG) long and took profits in a trading long today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, almost every sector is rising and volume is above average. Chinese government officials have been trying to jawbone down economic growth for quite some time to no avail. However, their recent actions may be a sign they are finally getting serious. The central government is letting the yuan float more freely and sanctioning local leaders for ignoring macro-control policies. I am sensing a significant change in attitude by China regarding its growth at any cost policies that are currently generating massive overcapacity. As we saw in 2000, overcapacity only becomes glaringly obvious after demand begins to cool. I continue to believe major dislocations within the Chinese economy will result in the next substantial global downturn, not U.S. inflation, consumer spending or housing. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bargain-hunting, lower long-term rates and declining energy prices.