Stocks Mostly Lower into Final Hour on Low Volume Consolidation of Recent Gains

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Computer longs, Biotech longs and Software longs. I have not traded today, thus leaving the Portfolio 100% net long. The overall tone of the market is slightly bearish as the advance/decline line is lower, most sectors are declining and volume is below average. Investor anxiety is about average. Today’s overall market action is neutral. The VIX is rising 3.3% and remains above average at 20.8. The ISE Sentiment Index is about average at 152.0 and the total put/call is above average at 1.01. Finally, the NYSE Arms has been running slightly above average most of the day and is currently 1.04. Considering recent gains, financial sector news/weakness and another rise in energy prices, today’s broad market performance is even more impressive. True growth stocks are especially strong with many leaders posting substantial gains. (ISRG), one of my long-held long positions, is trading at session highs, rising .5%, after another sharp decline this morning. I suspect the lows are in for the stock, however I still plan to add to the position on any further unexpected meaningful weakness going forward. I still believe (ISRG) has much more upside from current levels over the long-term. Apple Inc.(AAPL), another one of my long-held longs, is surging 3.5% ahead of earnings later this week. While the stock is getting extended short-term, I still expect it to finish substantially above current levels by year-end. The 10-year swap spread is falling another 2.25 basis points today to 64.75 basis points over Treasuries. This is down from a high of 92.75 in early March and down 11.45 basis points in three days. There has been much made over the recent rise in the US-dollar based LIBOR rate to 2.92%. However, this rate is still down 281 basis points from a high of 5.73% in September of last year. According to Intrade.com, the odds traders place on the US economy falling into recession this year have dropped to 59.5% from 79.0% a few weeks ago. Nikkei futures indicate a -36 open in Japan and DAX futures indicate an +61 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering and less economic pessimism.