Stocks Higher into Final Hour on Lower Energy Prices, a US Dollar Rally, Positive Economic Data

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Retail longs, Computer longs and Internet longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is modestly positive as the advance/decline line is modestly higher, most sectors are rising and volume is about average. The consumer expectations component of this morning's consumer confidence index fell to 78.6 from 83.2. The long-term average is 83.8. The current conditions component rose to 108.2. The current conditions component gauges consumers' current attitudes towards big-ticket purchases and is very important heading into the holidays. The current conditions component is now at the highest level since March and above the long-term average of 103.5. The 30-point spread between the two is very high by historic standards and highly unusual. Moreover, consumer expectations have been low by historic standards during this entire economic expansion, while the current conditions component has been around levels normally associated with vigorous economic activity. I expect this disconnect to evaporate over the intermediate term, thus pushing consumer confidence to new cycle highs. The politically and financially motivated fear mongering that is rampant in today's environment will continue to lose its effectiveness as U.S. stocks rally further, interest rates stay low, inflation remains subdued, the job market remains healthy, housing stabilizes at relatively high levels and energy prices resume their decline. I expect US stocks to trade modestly higher into the close from current levels on short-covering, positive economic data, lower energy prices, a stronger US dollar and portfolio manager performance anxiety.