Stocks Mixed into Final Hour, Recouping Morning Losses

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Computer longs and Biotech longs. I covered some of my 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 modestly lower, most sectors are declining and volume is above average. The 15% decline in the Bangkok SET Index last night only resulted in around 2% declines in other emerging markets. Emerging market fund inflows are currently dwarfing all prior peaks. I continue to believe this mania will end very badly as commodities decline further. The major US averages and breadth are near session highs after the Fed's Fisher said that economic growth is above 2% now and will accelerate next year. I sense that the bears are losing control again as more potential catalysts failed to send stocks meaningfully lower. This should result in further short-covering into the close as the near-record shorts try to protect gains of the last couple of days. Fisher is now answering questions and saying that the Fed senses inflation expectations are contained and that he has no doubt the Fed’s anti-inflation effort. He also repeated that he is comfortable with the current Fed policy stance. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, stable long-term rates and bargain-hunting.