Stocks Mostly Higher into Final Hour, Led by "Growth" Stocks

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Computer longs, Medical longs, Internet longs, Retail longs and Energy-related shorts. I have not traded today, thus leaving the Portfolio 100% net long. The overall tone of the market is slightly positive today as the advance/decline line is mildly higher, most sectors are rising and volume is about average. My intraday gauge of investor angst is still above average. Homebuilders are under pressure again, falling 0.72%, after Bank of America downgrades and target cuts. I continue to believe homebuilders should only be used as trading vehicles over the intermediate term. Johnson Redbook weekly retail sales rose 2.2% vs. a 2.3% gain the prior week. This is still modestly below the long-term average, but up from 1.4% in early July. Moreover, Target (TGT) reported healthy results after the close yesterday and this morning. While retail sales have been modestly below average, I still see little evidence of the significant consumer-spending slowdown that is being priced into the market. The 10-year yield is falling another 5 basis points and is very near the 5.5% that I think would prompt an immediate Fed rate cut. Countrywide Financial (CFC), the source of much recent angst, is rising 8.9% on speculation that Warren Buffett is looking at the company. The CFC credit default swap is falling another 63 basis points on the news, as well. Once again, today growth stock leaders are massively outperforming the broad market. Apple (AAPL) is jumping 4.5% on positive comments from UBS. I went to a large Apple store this past weekend, and it was absolutely packed, more crowded than during the iPhone launch. There were about the same amount of people around the iPhone table but many more around the computers. As I have said for the last year, I continue to believe even the most optimistic forward estimates are too low as a result of rising market share for the Mac. I still think the stock can hit $180 before year-end, and it remains my second-largest long position, behind Google (GOOG). I expect US stocks to trade modestly higher into the close from current levels on short-covering, rate cut speculation, lower energy prices and bargain hunting.