S&P 500 Blasts to Record High on Economic Optimism, Performance Anxiety, Short-Covering

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Computer longs, Retail longs, Medical longs and Biotech longs. I added to my (UA) long, added a (NUAN) long and added a (USO) short today, thus leaving the Portfolio 100% net long. The overall tone of the market is very positive today as the advance/decline line is substantially higher, almost every sector is rising and volume is above average. Bear Stearns (BSC) raised Google's (GOOG) year-end 2008 price target to $700. I view that target as very conservative. The average 30-year mortgage rate fell 5 basis points this week, to 6.37%. This is down 37 basis points from June levels. The DailyPrincetonian.com has a very interesting article today that says on-campus Mac users have quadrupled over the last four years. I think this article encapsulates very well what is going on at many other campuses across the country and the opportunity that Apple (AAPL) has to make massive market share inroads against the PC over the coming years. Apple has been relatively popular on campuses for sometime, however, as these students graduated and took jobs, many switched to PCs because that is what their employer used. I expect that to change in a big way in the future with the explosion in popularity of the Apple brand and the introduction of the official version of Boot Camp. My prediction a couple of years ago that Apple would become the largest, most dominant consumer electronics company on the planet is looking better by the day. There is some talk today by the many bears that recent stock gains have been a function of shorts capitulating. While I am sure a portion of the gains may be attributed to short-covering, I seriously doubt many shorts are capitulating. In fact, the NYSE just reported last night that short interest over the last two weeks from Sept. 14 through Sept. 28 actually rose .3%. The S&P 500 rose almost 3% during that period. I think shorts have been reloading after taking some profits the prior two months. It is more likely that recent outsized gains are more a function of the many underinvested bulls putting cash to work. Remember too, that money market assets are at record levels. The current US negativity bubble has left massive bull firepower on the sidelines as the supply of stock remains low and the macro backdrop for investing continues to be very positive, which bodes very well for further outsized gains. I expect US stocks to trade mixed-to-higher into the close from current levels on less economic pessimism, investment manager performance anxiety and short-covering.