Stocks Mixed into Final Hour as Profit-taking Offsets More Positive Economic Data

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Semi longs, Retail longs and Telecom longs. I added to my (SII) short and (ILMN) long 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 mixed and volume is above average. I see a number of small-/mid-cap “growth” stocks breaking out on volume even as the Russell 2000 remains flat today. Considering last week's strong market action, today's underlying tone remains very constructive. American Metal Market is reporting that Red Kite Management Ltd. holds almost all of the aluminum inventories tracked by the London Metals Exchange. This is the hedge fund that was rumored to be blowing up last week on copper losses. I continue to believe that the extent to which "paper demand" from investment funds has been driving most commodity prices to insane levels is vastly underestimated. Notwithstanding this historic speculation, the CRB Index is down 17.3% from May highs. As commodity-oriented fund redemptions accelerate over the intermediate term, I suspect that this will lead to even lower prices than would otherwise be the case as leveraged long positions are unwound and downside speculation by surviving funds increases. I expect US stocks to trade mixed-to-higher into the close from current levels on more economic optimism and stable long-term rates/energy prices.