Stocks Higher into Final Hour, Boosted by Financial and Homebuilding Shares

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Retail longs, Healthcare longs and Medical longs. I covered all of my (IWM)/(QQQQ) hedges and some of my (EEM) short this morning, thus leaving the Portfolio 100% net long. The overall tone of the market is positive as the advance/decline line is higher, most sectors are rising and volume is about average. Investor anxiety is above average. Today’s overall market action is bullish. Considering the outsized losses overseas last night and this morning, today’s action is impressive. Small-caps are especially strong. The only real areas of weakness are the restaurant sector and large-cap growth stock leaders. The rotation into the most heavily-shorted and beaten up sectors remains pronounced. I suspect this will last a bit longer, but is not the beginning of a longer-term trend of outperformance by these groups. The VIX is falling 2.75% today, but remains high at 28.3. Insider buying was brisk again last week. GE, PH, MON, TIE, JCI, T and CHK all saw meaningful insider purchases. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and bargain-hunting.