Stocks at Session Highs into Final Hour on Bargain-Hunting, Short-Covering

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Gaming longs, Computer longs, Semi longs, Medical longs and Retail longs. I covered all of my (IWM)/(QQQQ) hedges, some of my (EEM) short and added to my (AMSC) long this morning, thus leaving the Portfolio 100% net long. The overall tone of the market is mildly positive as the advance/decline line is slightly higher, most sectors are rising and volume is about average. Investor anxiety is above average. Today’s overall market action is bullish. The VIX is falling .6% today, but remains high at 28.0. The ISE Sentiment Index is a below average 115.0 and the total put/call is an above-average .96. Growth stocks are substantially outperforming value stocks for the second day in a row, with many positing meaningful gains. As I said last week, after underperforming in January, I suspect a significant rotation back into “growth” stocks and away from “value” stocks is underway again. I still expect growth to outperform value for several more years. Today’s upside market reversal came despite more weakness in the (XLF) and Asian indices, which is a big positive. Moreover, despite financial sector weakness, the TED spread fell to .78 basis points today, the lowest since August of last year. While I am not currently long (MSFT), I suspect that the stock is near an important low, which could help boost the Nasdaq as its substantial drag on the index subsides. Nikkei futures indicate a flat open in Japan and DAX futures indicate a +77 open in Germany. I expect US stocks to trade modestly higher into the close from current levels on bargain-hunting and short-covering.