Thursday, June 14, 2007

Stocks Jumping into Final Hour on Stable Long-term Rates, Short-Covering, Bargain-hunting

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Software longs, Computer longs, Medical longs and Retail 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, almost every sector is rising and volume is above average. Intel (INTC) is hitting a 17-month high today. DRAM prices appear to be turning up. As well, I have read several stories about an impending shortage of some flat-panel television components this fall as sales soar. This is very significant. The Morgan Stanley Tech Index is already 9% higher year-to-date, slightly outperforming the broad market, even with cyclical tech dragging. These stocks have large weightings in the tech indices. Growth tech is on fire and will remain so through year-end. I continue to believe a substantial downturn in inventories and a pick-up in sales will lead to a strong second-half for cyclical tech. Get ready now for a barn-burner of a second-half for all of tech. I will be surprised if the Morgan Stanley Tech Index isn't up at least 20% by year-end. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and bargain-hunting ahead of tomorrow’s CPI report.

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