Stocks Modestly Higher into Final Hour as Long-term Rates Continue Decline

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Semi longs, Networking longs and Commodity shorts. I have not traded 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 about average. Steel inventories at US service centers have been increasing, even as commercial construction has been booming at the strongest rate in 12 years. With slower global growth on the horizon, declining U.S. auto production and a winding down of the massive Olympic build out in China, I suspect steel prices have made an important top. The Philadelphia Stock Exchange SIG Steel Producers Index (STQ) will likely break down through its 200-day moving average imminently. My favorite shorts are U.S. Steel (X), Oregon Steel Mills (OS), AK Steel Holding (AKS), Schnitzer Steel Industries (SCHN) and Chaparral Steel (CHAP). I am currently short (SCHN). I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and lower long-term rates.