Stocking Soaring into Final Hour on Strength in Financials, Retail, Homebuilding and Airlines

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Computer longs, Internet longs and Biotech longs. I added (IWM)/(QQQQ) hedges on the bounce earlier today and then covered them, thus leaving the Portfolio 100% net long. The overall tone of the market is slightly positive as the advance/decline line is mildly higher, sector performance is mixed and volume is heavy. Investor anxiety is high again. Today’s overall market action is very bullish after the key reversals seen yesterday in many stocks. “Value” stocks are substantially outperforming today. The beaten-up and heavily shorted financials, retailers, airlines and homebuilders are rising significantly. The total put/call hit a very high 1.57 and the VIX hit a very high 34.42 today. The average 30-year mortgage rate plunged to 5.31% this week from 5.69% last week. About 70% of conventional mortgages are now able to be refinanced, according to CNBC. Mortgage rates are now at levels that will greatly alleviate the mortgage reset situation that has been weighing so heavily on the market. As I said yesterday, we are going to see a significant amount of stimuli in a short period of time, which will move the Fed closer to being “ahead of the curve,” rather than behind it. Moreover, there are still many other potential positive catalysts that could materialize at any time. With today’s market rebound and recent losses overseas, the S&P 500 is significantly outperforming most other global markets year-to-date. Moreover, the US market is trading again as if a meaningful bottom is now in place. I expect US stocks to trade modestly higher into the close from current levels on short-covering, lower energy prices, less economic pessimism and bargain hunting.