DJIA Soaring to Another All-Time High into Final Hour on Positive Earnings Reports

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Medical longs, Telecom longs and Retail longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially lower, almost every sector is rising and volume is heavy. Google (GOOG) is rising 3.2% after handily beating its estimates. I am actually shocked the stock isn't up more. Considering the market's modest forward P/E of 15.9, the fact that "growth" stocks are the cheapest relative to "value" in at least 30 years, Google's undervaluation relative to its Internet peers and the company's stellar fundamentals, I view the shares as egregiously undervalued at current levels and expect the stock to easily surpass $600 before year-end. The stock remains my largest long position. Intuitive Surgical (ISRG) also posted an excellent quarter and is surging 8.8%, as a result. I still believe this stock has the potential to be one of the greatest growth stocks over the next 10 years. The relatively few analysts that cover the company continue to significantly underestimate its potential. I remain long ISRG. Short interest on the NYSE surged 4.6%, to nearly 11 billion shares, from mid-March through mid-April, hitting another all-time high, despite the DJIA surging back near a record. Moreover, the last two months have seen NYSE short interest soar 14.6%, the largest two-month percentage increase since Bloomberg began tracking in 1991. The iShares Russell 2000 Index (IWM) is now the most heavily shorted security on the NYSE at over 218.5 million shares. Moreover, I am very surprised by the heavy concentration of new shorting in housing-related stocks, considering how much they are down, how much bad news is already out and how high their short interest already was. I continue to believe the many U.S. stock market bears are exaggerating, in every media outlet possible, the overall impact of housing on the economy in hopes of scaring investors, consumers and the government into a panicked state, thus making the problems worse than would otherwise be the case.

Here are the 20 NYSE stocks with the largest percentage increase in their short interest relative to their float from mid-March through mid-April:

1. DCT Industrial Trust (DCT), +44.8%
1. Beazer Homes U.S.A. (BZH), +15.5%
2. Technical Olympic U.S.A. (TOA), +14.5%
3. IndyMac Bancorp (NDE), +13.3%
4. Wendy's (WEN), +13.0%
5. Novastar Financial (NFI), +10.6%
6. Hovnanian (HOV), +10.0%
7. Cal Dive International (DVR), +9.2%
8. Valhi (VHI), +8.9%
9. WR Grace & Co. (GRA), +7.0%
10. Nautilus (NLS), +7.0%
12. KB Home (KBH), +6.9%
13. Meritage Homes (MTH), +6.9%
14. Downey Financial (DSL), +6.9%
15. Alpharma (ALO), +6.6%
16. Impac Mortgage Holdings (IMH), +6.5%
17. Willis Group Holdings (WSH), +6.4%
18. Fremont General Corporation (FMT), +6.2%
19. Under Armour (UA), +5.8%
20. Halliburton (HAL), +5.4%

I expect US stocks to trade mixed-to-higher into the close on stable long-term rates, positive earnings reports, bargain-hunting and short-covering.