Stocks Slightly Higher into Final Hour on Falling Energy Prices and Diminishing I-Bank Concerns

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs and Retail longs. I covered my remaining (IWM)/(QQQQ) hedges this morning, 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. There are an unusual number of stocks rising on significant volume today, considering the muted performance of the major averages. As well, I have numerous stocks on my monitor pages with 1%-3% gains. Finally, breadth is pretty good and economically sensitive small caps and cyclicals are outperforming despite today's manufacturing readings. The CBOE total put/call hit 1.85 earlier in the day. According to my Bloomberg data, this is the highest level ever seen on an up day for the major averages. I think the fact that we have seen some historic rises in gauges of investor angst during this mild pullback is very important. As well, the 10-day moving averages of the ISE Sentiment Index and CBOE total put/call index are both registering all-time high levels of bearishness by options traders. I suspect this period of high uncertainty regarding the economy will be viewed as another excellent buying opportunity over the coming months. I expect US stocks to trade mixed-to-higher into the close from current levels on bargain-hunting, falling energy prices, less concern over the I-Banking sector and short-covering.