Stocks Slightly Higher into Final Hour as Long-term Rates Ease

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Telecom longs and Energy-related shorts. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is slightly positive as the advance/decline line is slightly higher, sector performance is mixed and volume is about average. Johnson Redbook weekly retail sales surged 4.2% last week vs. a 4.1% gain the prior week and a 3.3% gain during this week last year. This is well above the long-term average and the highest weekly increase since early May of last year. Weekly retail sales have gained 3.4%, 3.7%, 3.9%, 4.1% and 4.2% over the last five weeks vs. weekly gains of around 2.75% the prior 3 months. Retail sales are clearly trending higher even as the record number of U.S. stock market bears continue say sales should be falling off a cliff right now. I continue to believe retail sales are bouncing back sharply into the spring, notwithstanding the drag from housing and higher gas prices. This is likely the result of the facts that wage growth is almost double the recent CPI reading, interest rates are still very low, about 2 million new jobs have been created over the last year, unemployment is historically low and Americans' net worth is at record high levels. These large positives continue to be ignored. My intraday gauge of investor angst is elevated, considering today’s overall action, which bodes well for further market strength into week’s end. I expect US stocks to trade mixed-to-higher into the close on short-covering, buyout speculation, lower long-term rates and bargain-hunting.