Stocks Sharply Higher into Final Hour on Falling Energy Prices, More Economic Optimism

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Biotech longs, Computer longs, Internet longs and Retail longs. I added to my (BRCM) long and covered my remaining (QQQQ)/(IWM) hedges this morning, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, almost every sector is higher and volume is above average. The ISE Sentiment Index plunged to a depressed 90.0 today. The CBOE total put/call is an above-average 96.0. Moreover, options traders, especially retail, remain very skeptical of the current rally in stocks as evidenced by longer-term readings. With short interest at an all-time record and many bulls underinvested, I suspect severe performance anxiety will set in much sooner than would otherwise be the case. I believe the many bears need a substantial pullback very soon to keep the wide-held belief of an imminent recession alive. The average stock continues to outpace the major averages. The Value Line Geometric index, the best gauge of the broad market, is 4.5% higher year to date. Moreover, mid-cap stocks are up about 6.0% for the year. As I have said several times of late, this is one of the better stock-picking enviornments I have seen. Many stocks are already soaring this year, despite modest gains in the major averages. I expect US stocks to trade mixed-to-higher into the close on short-covering, buyout speculation, lower energy prices, more economic optimism and bargain-hunting.