Stocks Modestly Lower into Final Hour on Profit-taking

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Telecom longs, Biotech longs and Commodity shorts. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are declining and volume is above average. The long-term average is a gain of about 2.9%. There is still no evidence, in my opinion, that a meaningful slowdown in consumer spending is underway, even as many investors continue to worry about such a decline. I still expect holiday shopping sales to exceed estimates. I continue to believe a healthy labor market, falling energy prices, relatively low 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, in my opinion. The Morgan Stanley Retail Index (MVRX) has soared 20.9% in about 12 weeks vs. a 10.3% gain in the S&P 500 over the same timeframe. I still expect continued outperformance by the sector through year-end. I expect US stocks to trade modestly higher into the close from current levels on short-covering, bargain-hunting, lower energy prices and investment manager performance anxiety.