Stocks Rising Again into Final Hour on Gains in Technology, Airline, REIT and Construction Shares

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Software longs, Semi longs and Biotech longs. I added a bit to my (GOOG) long and took some profits in another long today, thus leaving the Portfolio 100% net long. The overall tone of the market is very positive as the advance/decline line is higher, almost every sector is rising and volume is heavy. Investor anxiety is slightly above average, despite today’s gains. Today’s overall market action is very bullish given the jobs report, more news of impending subprime-related downgrades and recent sharp gains. Small and mid-caps are really flying today. The S&P 500 is now just 4.9% lower for the year and is massively outperforming almost every other global market. I suspect investment manager performance anxiety is coming into play again with so many proclaiming a new bear market had begun and short interest making new record highs right at the lows. The big story today is the monster gain in the semis. The (SMH) is 7% higher on the day, which is a significant new positive. The VIX is falling 7.0% today, but remains fairly high at 24.0. The ISE Sentiment Index is still below average at 124.0. Despite today’s jobs report the 10-year yield is rising slightly, the US dollar is surging and the odds for a recession this year are falling. Fed fund futures now imply a 70% chance for another 50 basis point rate at the March 18 meeting. I still believe the Fed is now “ahead of the curve” and it appears the market seems to agree. While the (MSFT)/(YHOO) deal is a short-term psychological negative for (GOOG), I suspect it will be viewed as a large positive over the intermediate-term. I also think the main causes for Google’s slight miss are temporary in nature and the company continues to build the foundation for stellar growth for much longer than most investors perceive. I view the stock as extremely attractive at current valuation levels given its prospects. Nikkei futures indicate an +253 open in Japan and DAX futures indicate an +58 open in Germany on Monday. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less economic pessimism, lower energy prices and bargain-hunting.