Stocks Higher into Final Hour on Less Economic Pessimism, Diminishing Credit Market Angst

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Gaming longs, Computer longs and Software longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is mildly bullish as the advance/decline line is slightly higher, most sectors are rising and volume is below average. Investor anxiety is around average. Today’s overall market action is mildly bullish. The VIX is falling 2.2% and remains above average at 17.75. The ISE Sentiment Index is n/a and the total put/call is slightly below average at .85. Finally, the NYSE Arms has been running about average most of the day and is currently .94. Tech stocks are relatively strong again today. The MS Tech Index is now flat for the year. I expect tech stocks to continue to outperform over the intermediate-term. This year’s best performing style, Mid-cap Growth, is rising another .9% today and is now .49% higher for the year. The Citigroup US Economic Surprise Index is rising to -11.0 today, up from -100 in March. As well, the EU Index and Japanese Index are still below the US at -26.70 and -26.50, respectively. The European Financial Sector Credit Default Swap Index is falling another 3.58 basis points today to 63.12 basis points, despite weakness in financial equities. This is down from 78.0 basis points just 4 days ago. As well, the North Amer. High-Yield CDS Index is falling 12.32 basis points to 551.97 basis points, which is down from a high of 786.65 basis points on March 18th. Despite the .6% gain in crude oil today, heating oil is falling another 1.0%. The CRB RIND Index, which is a measure of price movements of 22 sensitive basic commodities that are used in the initial stages of production, has declined 5% over the last two weeks and is close to testing its 200-day moving-average. Nikkei futures indicate a +102 open in Japan and DAX futures indicate a +24 open in Germany tomorrow. I expect US stocks to trade mixed into the close from current levels as less economic pessimism and diminishing credit market angst offset profit-taking and higher energy prices.