Stocks Lower into Final Hour on Profit-Taking

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Retail longs, Medical longs and Biotech longs. I have not traded today, thus leaving the Portfolio 100% net long. The overall tone of the market is negative today as the advance/decline line is lower, most sectors are declining and volume is around average. Intuitive Surgical (ISRG) is surging after Oppenheimer raised its target to $270. I think that is doable before year-end. EchoStar Communications (DISH), which has recently been the subject of buyout speculation, is surging on volume on no news. The dollar is notably strong against the yen of late. The CurrencyShares Japanese Yen Trust (FXY) is breaking down technically. Many market-leading stocks are rising again today, despite mild losses in the major averages. According to Brad Cole, of Cole Partners, commodity hedge fund investments have surged 293% over the last two years and 83% in just the last year, to $55 billion. As well, the number of commodity hedge funds have risen from 134 to 400 over the last two years. This doesn't even take into account all the other investment funds that now allocate a portion of their capital to commodity speculation. In my opinion, speculation by these types of funds is mainly responsible for the huge surge in prices of the underlying commodities over the last couple of years rather than supply/demand fundamentals. I continue to believe the next meaningful global slowdown will result in massive drops in most commodities as many of these funds unwind their long positions and go short. This will likely result in a significant drop in all inflation gauges and talk of disinflation or deflation once again. I still think that the secular trend of disinflation remains firmly in tact. I took profits on my iShares Lehman 20+ Year Treasury Bond (TLT) long awhile back, but I plan to build it back up on any significant rise in yields from current levels. I expect US stocks to trade mixed into the close from current levels less economic pessimism offsets profit-taking.