Stocks Sharply Higher into Final Hour on Strong Earnings, Mergers and Short-Covering

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Semi longs, Retail longs, Biotech longs and Medical longs. I covered my remaining IWM/QQQQ shorts and exited some of my EEM shorts today, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, every sector is rising and volume is above-average. Bears argue that geopolitical concerns are not fully appreciated by investors and thus not priced into stock prices. In my opinion, geopolitical concerns are more than priced into stock and commodity prices at current levels. The S&P 500 forward P/E is only 14.5, near long-term average levels, notwithstanding the greatest double-digit profit growth streak in U.S. history. Many other aspects of today's macro backdrop would normally dictate much higher valuations for equities. Just look at the 1980s and all the geopolitical concerns that were present. During this decade, stocks rose on average about 18.2% annually. I continue to expect P/E multiple expansion for U.S. stocks to finally begin later this year. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bargain-hunting and stable long-rates.