Stocks Slightly Higher into Final Hour on Short-Covering

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Retail longs and Computer longs. I covered my (IWM) and (QQQQ) hedges today, thus leaving the Portfolio 100% net long. The tone of the market is mildly positive as the advance/decline line is slightly higher, sector performance is mixed and volume is below average. Most headline inflation measures are still above-average levels, but are lagging indicators of inflation. The Fed knows this. Thus, I expect members to continue to talk modestly hawkish while taking no additional policy action. More dovish talk will likely occur when headline inflation numbers begin showing meaningful deceleration. The ISE Sentiment Index is plunging again today, down 32% to a depressed level of 55. It has been this low only one other time. I continue to believe most are bearish and the bulls are weak bulls. I had anticipated a mixed week for stocks, but given the set-up I wouldn't be surprised to see another push higher over the next few days. I expect US stocks to trade modestly higher into the close from current levels on short-covering and bargain-hunting.