DJIA Hits Another All-time High, Surpassing 14,000 on Economic Optimism, Short-Covering, Lower Commodity Prices

BOTTOM LINE: The Portfolio is higher into the final hour on gains in Retail longs, Medical longs, Semi longs and Energy-related shorts. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is positive today as the advance/decline line is higher, most sectors are rising and volume is above average. Corn is falling another 3.4% today and has plunged 26% from its February 26 all-time euphoric high. The record high occurred five days after I warned that the investment frenzy over the commodity may be nearing a crescendo. The Goldman Sachs Agricultural Commodity Index continues to trade poorly, as well, having peaked in June. I suspect fears over food price inflation are also peaking. Eggs, fresh fruit and meat prices all declined in today's PPI release. It is also interesting to note that corn bulls have insisted for a couple of years that supply can't keep up with rising demand, due to ethanol, yet the commodity is in a freefall. I don't think the fundamentals have changed that much. I just think that the record long speculation by investment funds is reversing. The exact same situation has developed in the oil futures market, and almost nobody is acknowledging it. Large speculators are the most net long oil futures in U.S. history, while commercial hedgers -- including some of the very energy companies that oil bulls love -- are the most net short in history. This exact same situation occurred in corn before its imminent top. I suspect this huge red flag, which is currently being ignored, will be viewed as such before year-end. I continue to believe a major double-top in oil is in the process of forming and still plan to meaningfully increase my energy-related short exposure over the next six weeks. I expect US stocks to trade mixed-to-higher into the close from current levels on more economic optimism, buyout speculation, short-covering, investment manager performance anxiety and lower commodity prices.