Stocks Slightly Higher into Final Hour on Small-cap Strength

BOTTOM LINE: The Portfolio is about even into the final hour as gains in my Semi longs, Biotech longs and Commodity shorts offset losses in my Internet longs and Telecom longs. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is slightly positive as the advance/decline line is modestly higher, most sectors are rising and volume is slightly above average. The latest commitment of traders report showed net commercial US dollar index longs surged to the highest since late 2004. Moreover, net large speculative traders have the largest net short position in the US dollar index since late 2004. The US dollar index made a significant bottom in late 2004 and rose 15.2% over the next 11 months. As well, a recent survey by Bloomberg of traders, investors and strategists showed only 9.1% US dollar bulls versus the euro. US dollar bulls were 7.4% around the significant bottom in 2004. I suspect a similar outcome is likely this time as global investor sentiment towards the US dollar is once again excessively pessimistic. This has negative implications for the prices of many commodities. I expect US stocks to trade mixed into the close from current levels as commodity stock weakness offsets gains elsewhere.