Stocks Mixed into Final Hour on Healthy Consolidation of Recent Gains

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Medical longs and Computer longs. I have not traded today, thus leaving the Portfolio 100% net long. The overall tone of the market is positive today as the advance/decline line is slightly higher, most sectors are rising and volume is around average. Despite today's negative pending home sales report, the homebuilding index is today's top performing sector, rising 3.45%. This is further evidence of just how much bad news is already priced into many stocks. A number of other sectors are gaining today, as well. Airline, gaming, retail, REITs, construction, biotech, investment bank, networking, alternative energy and Internet stocks are all in positive territory. Many market-leading growth stocks are substantially outperforming the broad market again. Google (GOOG) is surging 2%, to $594, an all-time high. I predicted at the beginning of the year that Google would easily surpass $600 before year-end. I now think that $650-$675 is likely. Long term, I expect the stock to rise substantially from current levels as earnings grow at a much higher rate for longer than most investors expect and it finally receives a premium growth stock multiple on those earnings. The stock remains my largest equity long position, just ahead of Apple (AAPL) and Intuitive Surgical (ISRG). According to Dow Jones, the Equity Market Neutral hedge fund strategy fell -0.63% in September, which was the best September for stocks since 1998, as the S&P 500 surged 3.7%. This leads me to believe that these funds are still leaning short, or are just incorrectly positioned. I continue to believe that this strategy, which has seen massive inflows since the bubble burst in 2000, will begin to see significant redemptions very soon and that a large portion of this capital will find its way into more positively correlated U.S. stock strategies. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower long-term rates and investment manager performance anxiety.