Stocks Modestly Lower into Final Hour on Profit-taking and Mildly Disappointing Earnings Reports

BOTTOM LINE: The Portfolio is slightly lower into the final hour as losses in my Computer longs and Retail longs more than offset gains in my Steel shorts. I took profits in an existing long, added to my (BBY) long and added (EEM), (IWM) and (QQQQ) hedges this morning, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are falling and volume is slightly above average. A recent Barclays report trumpets the massive amount of capital that has gone into commodity-related funds of late. I would just like to point out that global growth has been booming, the U.S. dollar has been weakening, yet, notwithstanding the mania for commodities, the CRB Index is down 6.7% over the last year. Moreover, the average commodity hedge fund is down double digits for the year. I see extraordinarily high bearish sentiment in the broad U.S. stock market, given recent gains. However, equity investor complacency regarding commodity-related stocks is exceptionally high. I remain overweight short these stocks. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, buyout speculation, lower energy prices, declining long rates and portfolio manager performance anxiety.