Stocks Sharply Higher into Final Hour on Falling Energy Prices, Reversal Lower in Long-term Rates

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my I-Banking longs, Medical longs, Semi longs and Retail longs. I added to my (TLT) long, added to a couple of commodity shorts, covered my (IWM/QQQQ) hedges and covered some of my (EEM) short today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is lower, every sector is rising and volume is above average. A recent long addition, Akamai Technologies (AKAM), was upgraded today by Hambrecht, and the stock is rising 7.2%. I do not believe it is too late to buy this stock around current levels. The AAII percentage of bulls rose to 40.59% this week from 33.33% the prior week. This reading is still below average levels. The AAII percentage of bears fell to 42.57% this week from 44.79% the prior week. This reading is still at a high level. These pessimistic readings come even as the DJIA is just off one of its most prolific winning streaks in history and is fresh off a new all-time high six days ago. Moreover, the 10-week moving average of the percentage of bears is currently 40.5%, also a high level. The 10-week moving average of the percentage of bears peaked at 43.0% at the major bear-market low during 2002. Moreover, the 50-week moving average of the percentage of bears is currently 37.3%, a very high level seen during only two other periods since tracking began in the 1980s. Those periods were October 1990-July 1991 and March-May 2003, both of which were near major market bottoms. The extreme readings in the 50-week moving average of the percentage of bears, during those periods, peaked at 41.6% on Jan. 31, 1991, and 38.1% on April 10, 2003. We are still very close to eclipsing the peak in bearish sentiment during the 2000-03 market meltdown, which is astonishing considering the macro backdrop now and then. I expect US stocks to trade mixed-to-higher into the close from current levels on bargain hunting, lower long-term rates, lower energy prices and short-covering.