DJIA Hits Another All-Time High on Economic Optimism, Lower Energy Prices, Healthy Earnings

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Retail longs, Medical longs and Biotech 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, almost every sector is rising and volume is heavy. Earnings growth is decelerating, yet I am seeing more violent upside reactions by stocks to earnings reports than I have seen in a very long time. This could help break the mentality of "sell all good news" that has dominated trading in the current U.S. negativity bubble. This is a very positive development. Mostly strong economic reports of late have led to some talk that growth would accelerate to such an extent this year that the Fed would have to hike rates. Cyclicals are soaring 5% higher already this year. While economic growth is accelerating from last year's midyear slowdown, I suspect growth will average about 3% this year. It will feel like less than 3%, however, due to how much less the deflator will likely subtract from nominal growth than last year. It is interesting to note that "high-school dropout copper" is trading near recent lows, falling 2.5% today, despite the stronger economic data and extreme speculation in many other commodities. I suspect if you are an aggressive trader that today may be a good day to take profits in some of the deep cyclicals that have had big runs. I expect US stocks to trade mixed-to-higher into the close from current levels on economic optimism, bargain-hunting, short-covering and lower energy prices.