Stocks Higher into Final Hour, Poised for Best Week in 4 Years

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Retail longs and Semiconductor 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 slightly higher, sector performance is mixed and volume is above average. Investors are mostly ignoring the Iranian situation today. Considering we just issued the Iranian president a visa, it is very unlikely that today's situation will worsen, in my opinion. Yes, oil is .52 higher, but that is a rather muted response considering how far oil has fallen and the recent surge in speculation by investment funds. Moreover, gold is down $7 an ounce on the news, notwithstanding recent hawkish Fed comments. I am starting to wonder what would make gold move higher considering it is down almost $40 oz. from February highs during a time when emerging markets plunged, the U.S. dollar weakened, inflation readings accelerated and Iran captured British soldiers. Gold trades very poorly considering these recent events. Here is a good summary from Bloomberg of recent market data that indicate investors' fears over the effects of sub-prime woes are waning. The many stock market bears will point to this as evidence of complacency. However, I would note that recent economic data have been pointing toward economic acceleration, not deceleration. Housing has been slowing substantially for two years. Economic growth will likely come in substantially below trend this quarter. However, we should see a meaningful bounce back in 2Q and trend growth before year-end. I expect US stocks to trade mixed-to-higher into the close on short-covering.