Stocks Mixed into Final Hour as Falling Commodity Shares Offset Gains Elsewhere

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Networking longs and Commodity shorts. I added (BHP) short and added to a few existing longs today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are rising and volume is above average. Copper is breaking down today, falling another 3%. It has declined 17.6% since its high in May. Inventories at the London Metal Exchange, while still historically low, have surged 346% from lows seen in July 2005. Copper is priced as though a shortage is imminent. I suspect this entrenched belief is in the early stages of reversing. U.S. housing construction, which had been a huge source of demand, is slowing substantially. Substitution is also occurring. China's government has stated numerous times they would like construction in major cities completed by late this year in preparation for the Olympics. As well, as I said yesterday, it looks as though China's central government is finally getting serious about slowing its runaway growth. I think futures traders are beginning to anticipate copper inventories moving much higher over the intermediate term. I suspect copper prices have already put in place a major top. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bargain-hunting and declining energy prices.