Stocks Lower into Final Hour on Year-end Profit Taking

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Internet longs, Computer longs and Biotech longs. I added to my commodity shorts and added IWM, QQQQ and EEM hedges today, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is substantially lower, most sectors are declining and volume is below average. Broadbased weakness in commodity-related stocks is weighing on the overall market, especially small caps. However, a number of sectors are positive outside of commodities. I still firmly believe overall sentiment towards U.S. stocks is extraordinarily bearish given recent gains, while many commodity investors remain very complacent given the ongoing deterioration in the underlying fundamentals. I suspect the record speculation that has been boosting most commodity prices to absurd levels will work against them next year as more funds jump the short side. I expect US stocks to trade mixed-to-lower into the close from current levels on profit-taking.