Stocks Higher into Final Hour on Diminished Subprime Fears, Buyout Speculation, Short-Covering

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Software longs and Semi longs. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is slightly positive today as the advance/decline line is slightly lower, most sectors are rising and volume is above average. Tech stocks continue to trade very well. The Morgan Stanley Tech Index is now 12.1% higher year-to-date vs. a 7.7% gain in the S&P 500. As I said a couple of months ago when tech was being maligned on a daily basis, I think it will outperform through year-end. It still isn't too late to increase exposure to the group, in my opinion. I still plan to add to my Goldman Sachs (GS) long on any further significant weakness related to another spike in sub-prime fears. As I have said before, if housing results in a bear market, it will be the most telegraphed and obvious bear market catalyst in history. I continue to believe sub-prime problems will remain contained for the most part and that consumer spending will accelerate meaningfully into the fall as energy prices drop substantially, the job market remains healthy, inflation decelerates further, stocks rise more, home sales stabilize at relatively high levels and long-term rates move back down. I expect US stocks to trade modestly higher into the close from current levels on bargain-hunting and short-covering.