Stocks Mixed into Final Hour as Falling Oil Prices Offset Profit-taking

BOTTOM LINE: The Portfolio is about even into the final hour as gains in my Retail longs and Telecom longs are offsetting losses in my Semi longs and Medical longs. I added to my (LVLT) long and added to an existing energy-related short today, thus leaving the Portfolio 100% net long. The tone of the market is neutral as the advance/decline line is slightly lower, sector performance is mostly positive and volume is below average. Transports are breaking 2.0% higher today after news that Warren Buffett has acquired a large stake in Burlington Northern Santa Fe (BNI). Besides BNI, Alexander & Baldwin (ALEX), Con-Way (CNW), CSX Corp. (CSX), Norfolk Southern (NSC), Union Pacific (UNP) and YRC Worldwide (YRCW) are powering the Transportation Index higher. While there is no way to know the exact rationale behind Buffett's actions, I seriously doubt he would make such a move if he thought that there was a high probability of an imminent U.S. recession. Over the last hour, oil's decline has accelerated, with the commodity now down $2.71 per barrel, to $61.57 per barrel. Many energy-related stocks that had been up over 1% this morning are now at session lows, falling 0.1%-0.3%. This seems to be pressuring the broad market a bit. The decline in oil is coming despite more optimism over U.S. economic growth, more noise from Iran over its nuclear program, another big jump in crude oil large speculative longs last week, a 4% gain in copper and another huge surge in crack spreads. The underlying tone of trading in oil has completely changed since the end of the Iranian/U.K. hostage tensions, and the commodity is now back below its 200-day moving-average. Any weakness in the broad market related to a decline in oil is likely just temporary. I expect US stocks to trade mixed-to-higher into the close on short-covering, buyout speculation, falling energy prices and bargain-hunting.