Stocks Higher into Final Hour on Buyout Activity, Falling Energy Prices

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Retail longs and Internet longs. I covered my remaining (IWM)/(QQQQ) hedges this morning, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are rise and volume is average. Energy equity insiders are selling into recent relative strength. In the weekly insider selling/buying report today from the Washington Service, energy insiders were the greatest net sellers. Energy insiders bought $10,102,451 worth of stock last week and sold $363,804,978. The last time energy insiders led sector net sellers was when oil was around $70 per barrel. As well, commercials have been selling into oil price weakness, which is rare, and have been net short for several weeks. The last time commercials were this short oil was in August of last year, again when oil was around $70 per barrel. The line in the sand is likely $50 per barrel. If oil were to convincingly take out this critical level, I believe a negative sea change in investor sentiment would occur with respect to the longer-term direction of the commodity, which would lead to another substantial technical breakdown in energy-related stocks. I expect this to occur later this year, which would have very positive implications for the broad U.S. market. I expect US stocks to trade mixed-to-higher into the close from current levels on bargain-hunting, falling energy prices and short-covering.