Stocks Lower into Final Hour on Interest Rate Jitters

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Semi longs and Networking longs. I added (IWM) and (QQQQ) shorts today, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are declining and volume is heavy. The Johnson Redbook same-store sales index rose 2.5% year over year last week vs. a 2.5% rise the prior week. This week's gain is up from a 1.5% increase in late April 2005. The long-term average is a gain of around 2.5%. The Morgan Stanley Retail Index is 22.3% higher since late October, almost double the 12.0% gain for the S&P 500 (SPX) over the same time period. I continue to believe a healthy labor market, low long-term interest rates, falling energy prices, improving sentiment and rising stock prices will cushion any consumer weakness this year related to a slowing housing market. Retail sales will likely remain around average levels for most of the year. I expect US stocks to trade mixed-to-higher into the close from current levels on bargain-hunting and short-covering.