Stocks Sharply Higher as Natural Gas Plunges, Economic Data Exceeds Expectations and Earnings Remain Strong

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Semi longs, Semi Equipment longs, Medical longs and Biotech longs. I exited my IWM and QQQQ shorts and added to my AAPL and RACK longs, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, almost every sector is rising and volume is heavy. Measures of investor anxiety are mostly lower. As pundits continue to bash the best earnings streak since record keeping began in 1936, I am becoming more bullish. Earnings so far for this quarter are rising about 13%, almost double the long-term average. The S&P 500 will be even cheaper relative to earnings after all the reports are in. Moreover, the bar has been sufficiently lowered for next quarter without too much damage to the major averages. The S&P 500 is still up 2.0% this month and the Russell 2000 is up 7.5%. These are very good performances to start the year and come amid a decline in bullish sentiment, escalating fears over Iran, perceived "poor" earnings, weaker housing data, elevated oil prices, talk of an impending recession and rising long-term rates. This bodes very well for another push higher in U.S. stocks over the coming weeks. I expect US stocks to trade modestly higher into the close from current levels on short-covering, more optimism over US economic growth and collapsing natural gas prices.