Stocks Ripping Higher into Final Hour on Less Economic Pessimism, Short-Covering

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Semi longs, Computer longs, Internet longs, Biotech longs and Software longs. I took some more profits in my (TLT) long and a trading long and then finished adding (OMCL) long 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 around average. Investor anxiety is around average. Today’s overall market action is very bullish. Notwithstanding many pundits’ attempts to paint retail sales as bleak, the ICSC reported today that November retail sales rose 3.5% versus estimates of a 2.4% increase. WMT, ANF, ARO, ANN, BJ, BONT, DDS, JOSB, GPS, KSS, ROST, BKE, COST, M, JWN and SKS all beat estimates, as well. The 50-month average of ICSC retail sales increases is 3.5%. I continue to believe overall retail sales will exceed estimates for the entire holiday shopping season. The average 30-year mortgage rate plunged again this week to 5.96% from 6.1% the prior week. This is now down 78 basis points from June highs. As mortgage rates continue to fall, refis should help take some pressure off the overall housing situation as troubled homeowners move from arms to fixed-rates mortgages. The JPMorgan Emerging Market Bond Index is .94% higher over the last week, while the Bear Stearns High-Yield Index is .68% higher over that period. Fitch said that the subprime mortgage plan may stabilize mortgage defaults. Whether you agree with the government’s plan or not, investors are very pleased with it based on the action in the financials. The (XLF) is 11% higher in less than two-weeks. (ISRG) hit another new all-time high today. The stock is up 269% year-to-date and remains my third largest long position, behind Google(GOOG) and (AAPL). I expect US stocks to trade mixed-to-higher into the close from current levels on less economic pessimism, bargain-hunting and short-covering.