Stocks Slightly Higher into Final Hour on Economic Optimism

BOTTOM LINE: The Portfolio is about even into the final hour as gains in my Semi longs, Medical longs and Retail longs are being offset by losses in my 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 slightly below average. Bloomberg just reported that commodity hedge funds plunged 11.8% in July. This was the third consecutive monthly loss and the worst monthly loss since tracking began in 2001, according to the Center of International Securities and Derivatives Markets. Commodity funds are now down 13.1% from year-ago levels despite a historical run-up in commodity prices. There are now 500 commodity funds in the U.S. compared to 180 at the start of October 2004. I suspect redemptions from many commodity-related funds over the coming months will further pressure prices for commodities. I continue to believe the unwinding of a speculative mania in commodities does not mean the global economy is slowing substantially. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, more economic optimism and lower long-term rates.