Stocks Slightly Higher, Led by Tech, Healthcare and Commodities

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Telecom longs, Medical 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 about even, most sectors are gaining and volume is above average. The Fed's Fisher spoke in Austin, Texas today. Here is a summary of his comments:

1. The damage from the subprime market is mostly contained.
2. The U.S. economy is strong enough to weather this storm.
3. Consumption continues to pump the economic engine.
4. Alt-A mortgages may also have imprudent loans.
5. Subprime problems may be a blessing in disguise.
6. Mortgage market discipline will reassert itself.
7. Pending home sales data may be a sign that lower prices are spurring purchases.
8. The Fed is treading very carefully in response to housing.
9. Regulatory agencies are working hard to avoid overreaction with credit standards.
10. Problems are mainly in the ARM segment of the subprime market, which is only 8.5% of total mortgages outstanding.

Overall, these comments are constructive. I seriously doubt the Fed is even contemplating raising rates at this time. The 10-year yield, the best predictor of longer-term inflation, is still low and nowhere near problematic levels, notwithstanding the recent tick higher in inflation readings. As well, the Fed seems very aware of all the housing issues. I continue to believe that the Fed will stand pat this year but that a cut is way more likely than a hike. I expect US stocks to trade mixed-to-higher into the close on short-covering, buyout speculation, lessoned geopolitical tensions and bargain-hunting.