Stocks Mostly Higher into Final Hour on Short-Covering, Bargain Hunting, Positive Intel Comments

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Software longs, Alternative Energy longs and Biotech longs. I added to my (QQQQ)/(IWM) hedges and then took some of them off today, thus leaving the Portfolio 75% net long. The tone of the market is mildly positive as the advance/decline line is slightly higher, sector performance is mixed and volume is above average. Investor anxiety is high. Today’s overall market action is bullish. The VIX is rising 3.1% and is high at 26.07. The ISE Sentiment Index is very low at 73.0 and the total put/call is high at 1.09. Finally, the NYSE Arms has been running above average most of the day and is currently 1.0. The Euro Financial Sector Credit Default Swap Index is rising 5.3% today to 92.56 basis points. This index is up from a low of 52.66 on May 5^th, but down from 129.46 basis points on March 20^th. The North American Investment Grade Credit Default Swap Index is rising .35% today to 143.50. The TED spread is rising 12.93% to 1.13. The AAII % Bulls came in at 22.2% this week, while the % Bears rose to 55.2%. Both professional and individual investor sentiment remains historically depressed. Growth stocks are substantially outperforming value stocks again today. Given the action in certain financial shares, sharp losses in Europe, a $5 spike in oil and deafeningly scary rhetoric from the financial press, today’s market action is more impressive. While I continue to believe a hard reversal lower in commodities is necessary for a sustainable market bottom, today’s whippy market rise in the face of numerous headwinds is the type of action I would expect to see near a sustainable low in equities. Intel(INTC) said over the last hour that that global business is still very strong, which is also a big positive. Nikkei futures indicate an +28 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 bargain-hunting.