Stocks Slightly Lower into Final Hour on Healthy Consolidation of Recent Strong Gains

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Computer longs, Medical longs and I-Banking longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is slightly negative as the advance/decline line is mildly lower, sector performance is mixed and volume is above-average. Back in February I pointed out that the Vietnam Index was in the midst of an unsustainable meteoric rise. The Index peaked on March 12 and has since plunged 20.3%. While other Asian emerging markets continued to rally last night, the Vietnam Index fell another 3.9%. While this market is relatively small, it may indicate a negative shift in psychology regarding the mania for Asian emerging market stocks. The Vietnam Index is still 23.8% higher year-to-date and almost 300% higher over the last two years. The only place I see more investor complacency than commodities is in emerging markets and the two go hand-in-hand. If one mania ends, the other will soon follow, in my opinion. I still expect the mania for emerging market stocks to begin reversing course this year and eventually result in a significant increase in the demand for U.S. stocks at a time of very low supply. The UBS/Gallup Index of Investor Optimism fell to 74 in April vs. 78 in March. This is the lowest reading since September 2006, despite recent stock gains. I continue to sense that very few investors believe any meaningful market upside is possible from current levels. I continue to disagree. I expect US stocks to trade mixed into the close as higher energy prices and profit-taking offset buyout speculation and earnings optimism.