Stocks Slightly Lower into Final Hour on Political Concerns and Profit-taking

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Telecom longs and Medical longs. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is modestly lower, most sectors are declining and volume is slightly above average. The Johnson Redbook same-store sales index rose 3.4% year-over-year this week vs. a 3.4% rise the prior week. 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 this remains a focal point for the many bears. Housing sales and net home equity extractions have been falling substantially for over a year. The Case-Shiller housing futures are still projecting about a 5% decline in the average home price over the next seven months. Considering that the median house has appreciated over 50% during the last few years, with record high U.S. home ownership, this would be considered a "soft landing." Home values are more important than stock prices to the average American. However, the median home has barely declined in value after a record run-up, as the S&P 500 has soared 17% over the last year. I continue to believe the overall negative effects of housing on the U.S. economy are currently being exaggerated by the bears. 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 keep boosting consumer spending over the intermediate term as housing stabilizes at relatively high levels. The Morgan Stanley Retail Index (MVRX) has soared 22.2% in about 14 weeks vs. a 11.5% gain in the S&P 500 over the same timeframe. I still expect continued out-performance by the sector through year-end. I expect US stocks to trade mixed-to-higher into the close from current levels on falling long-term rates and short-covering.