Stocks Higher into Final Hour on More Economic Optimism

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Semi longs, Computer longs and Biotech longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, sector performance is mixed and volume is above average. The Johnson Redbook same-store sales index rose 4.0% year over year last week vs. a 3.9% rise the prior week. The long-term average is a gain of around 2.9%. This is still more evidence that the anticipated collapse in consumer spending won't materialize anytime soon, even as most investors continue to worry about such a decline. A healthy labor market, falling energy prices, lower long-term interest rates, decelerating inflation, a rising stock market and less irrational pessimism will continue to more than offset slowing housing over the intermediate term. The Morgan Stanley Retail Index (MVRX) has surged 16.0% in the last two months. I expect continued outperformance by the sector during the fourth quarter. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, more economic optimism and bargain hunting.