Stocks Mostly Higher into Final Hour, Led by Technology Shares

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Semi longs, Computer longs, Internet longs and Medical longs. I added to my (NUAN) long and took some profits in another long today, thus leaving the Portfolio 100% net long. The overall tone of the market is positive today as the advance/decline line is higher, most sectors are rising and volume is about average. Investor anxiety is above average again. Today’s overall market action is bullish. The total put/call hit a high 1.25 and the ISE sentiment index hit a very depressed 64.0 today, as retail option traders remain skeptical of the chances for a year-end rally, which bodes well for further gains. Despite the Bear Stearns(BSC) and MBIA(MBI) news, the (XLF) is less than one percent lower on the day, which isn’t too bad. Moreover, the 30-day asset backed commercial paper yield is falling another 9 basis points today and is down 51 basis points in a week. The US dollar is firm, despite today’s weaker economic data, which bodes well for further dollar strength. Oil is having trouble staying above $92/bbl. for the fifth consecutive day. I still think oil will begin another move lower at the first of the year after the year-end mark-ups by investment funds end, the dollar strengthens more, supply exceeds estimates and global demand continues to decelerate. True “growth” stocks are particularly strong again today. As well, technology shares are substantially outperforming the major averages. The MS Tech Index is now 10.6% higher year-to-date, almost triple the return of the S&P 500. I said early in the year that I expected technology to outperform this year. I also expect this to be the case again next year. Research In Motion's(RIMM) earnings report after the close could provide the catalyst for further tech sector gains tomorrow. The financials continue to trade as if at the very least they are forming a short-term bottom. Instability in the financial sector is the only thing holding the broad market back from more vigorous gains into year-end, in my opinion. Overall bearish sentiment towards US equities remains very elevated. I expect US stocks to trade mixed-to-higher into the close from current levels on diminishing credit market angst, tech sector strength, bargain-hunting and short-covering.