Stocks Finish Sharply Higher on Falling Energy Prices, Declining Long-term Rates and Less Irrational Pessimism

Indices
S&P 500 1,230.96 +.84%
DJIA 10,640.10 +.89%
NASDAQ 2,196.68 +.96%
Russell 2000 664.93 +.77%
DJ Wilshire 5000 12,295.55 +.78%
S&P Barra Growth 589.31 +.87%
S&P Barra Value 637.38 +.82%
Morgan Stanley Consumer 593.28 +1.08%
Morgan Stanley Cyclical 739.15 +.87%
Morgan Stanley Technology 514.80 +.57%
Transports 4,043.90 +.99%
Utilities 391.16 -1.19%
Put/Call .75 -8.54%
NYSE Arms .80 +4.79%
Volatility(VIX) 11.90 -7.03%
ISE Sentiment 156.00 +4.70%
US Dollar 92.04 -.04%
CRB 314.53 -.63%

Futures Spot Prices
Crude Oil 57.74 -.10%
Unleaded Gasoline 150.00 -.45%
Natural Gas 11.43 +.48%
Heating Oil 174.10 -.14%
Gold 467.40 -.06%
Base Metals 137.81 +.87%
Copper 187.05 -.05%
10-year US Treasury Yield 4.55% +.09%

Leading Sectors
Airlines +4.18%
Gaming +2.70%
Homebuilders +2.58%

Lagging Sectors
Coal -1.58%
Energy -3.12%
Oil Service -3.93%

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In Play

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on IMCL and LLL.
- Reiterated Underperform on TWMC and GM.

Afternoon/Evening Headlines
Bloomberg:
- IBM, Northrop Grumman, Computer Sciences and Accenture won contracts to develop models for a national system of electronic health information.
- The US dollar is headed for a second weekly advance versus the euro on improving fundamentals versus foreign currencies.
- Treasury 10-year notes rose the most since August after foreign investors bought a record amount of the securities at an auction.

The Age:
- Rio Tinto Group CEO Clifford said rising steel production in China is leading to an extreme shortage of iron ore.

BOTTOM LINE: The Portfolio finished substantially higher today on gains in my Internet longs, Retail longs, Airline longs, Semi longs and Energy shorts. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market was positive today as the advance/decline line finished higher, most sectors rose and volume was above average. Measures of investor anxiety were mostly lower into the close. Overall, it was a good day for the bulls as the major indices and breadth finished near session highs on above-average volume even as energy stocks finished near session lows. The MS Tech Index has broken out of the trading range that has contained it over the last year and appears poised to make an assault on multi-year high levels. Falling long-term interest rates, healthy economic growth, declining energy prices and less pessimism are providing the catalysts.