Stocks Sharply Higher into Final Hour as Dow Approaches All-Time High

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Retail, Computer longs and Commodity 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 gaining and volume is heavy. While investors continue to wring their hands over semiconductor inventories, the stocks are moving higher. This has always been and always will be the way this group trades. By the time, their fundamentals are strong, the sector has already had a major run. Yesterday, the president of IC Insights said he expects IC revenue growth to accelerate to 8% next year and 20% in 2008. I believe his assumptions are conservative. The time to buy semis is now. I expect the Philadelphia Stock Exchange Semiconductor Sector Index (SOX) to test five-year highs of around 650 over the next two years, for a gain of around 40% from current levels. I expect US stocks to trade modestly higher into the close from current levels on short-covering, lower energy prices, less pessimism, declining interest rates and bargain hunting.