Dow Jones Industrial Average Makes Another All-Time High as Energy Prices Fall, Election Uncertainty Winds Down and Long-term Rates Decline

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Semi longs, Telecom longs and Retail 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, most sectors are rising and volume is heavy. 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 risen 15.4% over the last year. Americans' median net worth is still at or near all-time high levels. I continue to believe the overall negative effects of housing on the U.S. economy are currently being exaggerated by the bears. Recently, Alan Greenspan and several Fed members have made similar statements. 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 20.2% in about 15 weeks vs. a 12.2% gain in the S&P 500 over the same timeframe. I still expect continued out-performance and another surge by retail stocks into year-end. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, performance anxiety, declining interest rates and lower energy prices.