Stocks Sharply Higher into Final Hour as Investors Anticipate Fed "Pause"

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Networking longs, Computer longs, Medical longs and Retail longs. I covered some of my (IWM) and (QQQQ) shorts today, thus leaving the Portfolio 75% net long. The tone of the market is very positive as the advance/decline line is substantially higher, every sector is rising and volume is above average. The Johnson Redbook retail same-store sales index rose a robust 4.3% year over year last week vs. a 3.3% rise the prior week. This is the strongest reading since August 2005. The long-term average is a gain of around 2.5%. Notwithstanding this strong reading, retail sales growth is likely peaking for the year right now. I continue to believe a slowdown in housing will result in consumer spending slowing back to average levels, which should push U.S. GDP growth back down to average rates. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering as investors factor in an imminent Fed “pause.”