Stocks Soaring into Final Hour on Falling Oil, Strength in the Retail and Financial Sectors

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Internet longs, Software longs, Retail longs and Computer longs. I covered some of my (IWM)/(QQQQ) hedges and some of my (EEM) short this morning today, thus leaving the Portfolio 75% net long. The overall tone of the market is very positive today as the advance/decline line is sharply higher, almost every sector is rising and volume is heavy. Investor anxiety is above-average despite today’s gains. The CBOE total put/call is soaring 38% today, to a high 1.26. If it were to close here, it would be the highest level seen during this pullback and the highest closing level since Aug. 29. The ISE Sentiment Index is also a below-average 130. The VIX is falling 20% today, but is still relatively high at 25. These readings are very surprising given the magnitude of today's gains. While I wouldn't be surprised to see a mild pullback tomorrow morning, these readings bode well for further gains in the near term. As well, near record S&P 500 index future shorts, near-record NYSE short interest, a record public short-interest ratio, record money market fund inflows, the sixth highest AAII bearish percentage the last decade, a record low hedge fund sentiment reading and the recent surge in mutual fund outflows all bode well for a continuation of recent gains over the coming weeks. Today's best performers are the beaten up market-leading growth stocks. While there could be some sort of retest in these shares over the coming days, I believe they have likely seen their lows for the year already. Apple (AAPL) is especially strong today, rising 11%, on news that it is talking to China Mobile (CHL) about selling the iPhone. I think the recent pullback in the shares was excessive and there remains substantial upside in the shares from current levels. Weekly retail same-store-sales rose 2.4% vs. a 2.1% gain the prior week and up from 1.4% in early July. Retail sales remain only modestly below average levels, and I still see no evidence of the sharp decline in consumer spending that has been predicted for several years. Seemingly, every year, the IEA raises its global oil demand growth forecast during summer driving season, and every year, it lowers it during the fourth quarter. This is one of the reasons oil is falling today. Global oil demand growth has not been strong for several years, despite a booming global economy. I expect US stocks to trade mixed-to-higher into the close from current levels on bargain-hunting, lower energy prices and short-covering.