Stocks Higher into Final Hour on Short-Covering, Less Political Uncertainty and Lower Long-term Interest Rates

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Telecom longs and Biotech longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are rising and volume is about average. An even more divided Senate, a House with many newly elected Democrats running to the right, a Republican President and Hillary Clinton likely running as a moderate in 08 should produce significant gridlock and result in much less market and economic damage than the many stock market bears would like. In my opinion, the 2008 election will have a much greater impact on the direction of the economy and stock market. Health care-related stocks are the only group under meaningful pressure today. I suspect the major averages have begun another meaningful surge higher into year-end. According to theflyonthewall.com, Reuters is reporting that Apple Computer (AAPL) executive Phil Schiller is saying that interest in the new iPod shuffle is "extremely high." He also said that shipments of the product began "when we expected" and that the company is "really excited" about the upcoming holiday period. The stock is rising to session highs on the report. I still see substantial upside in the shares and it remains my second largest long position behind Google (GOOG). I expect US stocks to trade modestly higher into the close from current levels on short-covering, performance anxiety, declining interest rates and less irrational pessimism.