Stocks Soaring into Final Hour on Diminishing Financial Sector Angst, A Firmer Dollar, Short-Covering, Bargain-Hunting

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Medical longs, Computer longs and Gaming longs. I covered all of my (IWM)/(QQQQ) hedges and some of my (EEM) short into the pullback after the FOMC announcement, thus leaving the Portfolio 100% net long. The overall tone of the market is very bullish as the advance/decline line is substantially higher, almost every sector is rising and volume is above-average. Investor anxiety is above-average, despite today’s sharp gains. Today’s overall market action is very bullish. The VIX is falling, but remains high at 25.92. The ISE Sentiment Index is a very low 88.0 and the total put/call is an above-average 1.0. Finally, the NYSE Arms has been low all day and is currently .42. According to Bankrate.com, the national average 30-year fixed rate mortgage has declined 34 basis points since last Tuesday to 5.74%. As well, weekly retail sales rose 1.1% this week versus a gain of 1.0% the prior week and up from a .5% gain three weeks ago. The G-7 currency volatility index is falling to 12.56 today, down from a 52-week high of 14.48 yesterday, which is also a positive. The Fed’s 75 basis point rate cut has helped strengthen the US dollar. The (XLF) is at session highs, rising 7.1%. I would expect to see strong gains in Asia tonight. The Shanghai Composite fell another 4% last night and is down 40.1% from last October’s high. Nikkei futures indicate an +410 open in Japan and DAX futures indicate an +40 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on diminishing financial sector angst, less economic pessimism, short-covering and bargain-hunting.