Dow Jones Industrial Average Exceeds January 2000 All-time High on Plunging Energy Prices

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Retail longs, Internet longs and Commodity shorts. I covered my (IWM) and (QQQQ) hedges today, thus leaving the Portfolio 100% net long. The tone of the market is slightly positive as the advance/decline line is slightly lower, most sectors are rising and volume is above average. The Johnson Redbook same-store sales index rose 3.8% year over year last week vs. a 4.0% rise the prior week. The long-term average is a gain of around 2.9%. There is still no evidence, in my opinion, that a substantial slowdown in consumer spending is underway, even as most investors continue to worry about such a decline. Recent weaker-than-expected manufacturing data is likely related to auto production cutbacks and will prove temporary. 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 15.7% in nine weeks. I expect continued outperformance by the sector during the remainder of this quarter. Bloomberg reported today that natural gas sellers in the U.K. are now giving it away and having to pay for the transport costs. This is what can happen when storage is full, while supplies continue to increase at a time of decelerating demand. I sense the hordes of speculators that drove energy prices to insane levels are just beginning to turn on the commodities. If they begin to jump on the short side in a meaningful way, energy prices could fall even more than I had anticipated. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower commodity prices and bargain-hunting.