Stocks Slightly Lower into Final Hour on Healthy Profit-taking

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Telecom longs, Retail longs and Medical longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is slightly positive as the advance/decline line is about even, most sectors are rising and volume is above average. Today's mild weakness comes despite another surge in mortgage applications and a 4-month high in the ADP Employment Change report. The 10-week moving average of mortgage applications continues to trend higher. The Case-Schiller Housing futures are now projecting just a 2.9% decline in the average home price over the next six months, up from projections of a 5.2% decline a couple of months ago. I am seeing many market-leading stocks breaking out despite the slightly negative performance in the major averages. The major averages will likely close near session highs. I suspect that the Dow and Nasdaq will join the Russell 2000 and S&P 500 and make new highs by week's end. I expect US stocks to trade modestly higher into the close from current levels on short-covering, lower commodity prices, positive economic data and portfolio manager performance anxiety.