Stocks Mixed into Final Hour as Plunging Oil is Offsetting Profit-taking Ahead of Earnings Season

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Airline longs, Computer longs and Commodity shorts. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is mixed as the advance/decline line is modestly lower, sector performance is mostly positive and volume is above average. Oil is falling another $2.04, to $50.95. OPEC's recent actions and comments lead me to conclude that OPEC has come to the realization, which I have been pointing out for several months, that it needs lower oil prices to try and prevent any further long-term demand destruction and loss of market share. As well, The Guardian is reporting that Iran's President is facing increasing hostility toward his policies. In an unprecedented rebuke, 150 members of the Iranian parliament signed a letter criticizing his recent actions. I am not hearing many talk about this, but it could be another one of the many reasons for the extreme weakness in oil. Energy-related stocks were investors' favorite sector coming into the new year. This has likely resulted in even greater portfolio manager underperformance this year as most energy shares are down 7%-10% already. In my opinion, it is not too late to sell these shares as the recent plunge in prices and very likely further oil price declines are not factored into the stocks at current levels. As I cautioned many times last year, commodity stocks look the cheapest on a valuation basis when they are at their most dangerous. If I were substantially behind the major averages this year due to the decline in commodity stocks, I would cut that weighting now and add more growth stock exposure as I think that growth stock outperformance through year-end will be significant. I expect US stocks to trade modestly higher into the close from current levels on short-covering, more economic optimism and bargain-hunting.