Stocks Higher into Final Hour on Less Economic Pessimism, Short-Covering, Bargain-Hunting

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Software longs, Alternative Energy longs and Biotech longs. I covered all 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 mildly bullish as the advance/decline line is slightly higher, sector performance is mostly positive and volume is below average. Investor anxiety is above-average. Today’s overall market action is mildly bullish. The VIX is falling 2.9% and remains above average at 23.1. The ISE Sentiment Index is a low 115.0 and the total put/call is an above-average 1.04. Finally, the NYSE Arms has been running about average most of the day and is currently .89. The US dollar continues to trade as if, at the very least, an intermediate-term bottom is in place. A move higher in the US dollar would be a large broad market positive as it would likely take some air out of the current commodity bubble. The TED spread is falling 5 basis points to 158 basis points today. The European Financial Sector Credit Default Swap Index is dropping 7 basis points to 84.50. I continue to believe recent market action indicates to me that the bears are running low on firepower. Nikkei futures indicate an +40 open in Japan and DAX futures indicate an +72 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close on short-covering, less economic pessimism and bargain hunting.