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

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Retail longs, Gaming longs, Alternative Energy longs and Software longs. I added to my (WMS) and (NUAN) longs and took profits in a trading long today, thus leaving the Portfolio 100% net long. The tone of the market is mildly bearish as the advance/decline line is slightly lower, sector performance is mixed and volume is below average. Investor anxiety is slightly above average. Today’s overall market action is neutral. The VIX is rising .8% and remains above average at 19.80. The ISE Sentiment Index is below average at 120.0 and the total put/call is slightly below average at .83. Finally, the NYSE Arms has been running about average most of the day and is currently .90. Mid-cap “growth” stocks are substantially outperforming the broad market today. Considering the rise in oil and decline in bank stocks, today’s broad market stock performance is more impressive. The US dollar is also near session highs versus the euro, which is also a large positive considering oil’s rise. The Citigroup US Economic Surprise Index is rising to -11.4 today, up from -100 in March. As well, the EU Index and Japanese Index are still below the US at -21.0 and -25.60, respectively. Mastercard(MA) just reported that the four-week moving average of retail US gasoline demand fell for the fifteenth week in a row, declining 6.3% from last year’s levels. That is a very serious decline in demand from the world’s largest user. The Bloomberg Base Metals Spot Index is falling below its 200-day moving average today for the first time since last October. One of my longs, (AMSC), is jumping 10% today to a new eight-year high after Kaufman Brothers rated it “Buy.” The stock is getting a bit extended short-term, but I would add to it on any meaningful pullback from current levels. Nikkei futures indicate a +176 open in Japan and DAX futures indicate a +27 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less economic pessimism and diminishing credit market angst.