Stocks Soaring into Final Hour on Falling Commodity Prices, Short-Covering, Bargain Hunting

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Computer longs, Medical longs, Biotech longs, Gaming longs and Commodity shorts. I covered all my (QQQQ)/(IWM) hedges and some of my (EEM) short today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are rising and volume is above average. Investor anxiety is above-average. Today’s overall market action is very bullish. The VIX is falling 8.73% and is above-average at 25.09. The ISE Sentiment Index is unavailable and the total put/call is high at 1.08. Finally, the NYSE Arms has been running about average most of the day and is currently .72. The Euro Financial Sector Credit Default Swap Index is rising 1.3% today to 95.17 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 falling .75% today to 145.5. The TED spread is falling another 4.4% to .94. This is now down 19 basis points in 7 days, which is a big positive. The 10-year TIPS spread, a good gauge of inflation expectations, is falling 6 basis points today to 2.48%, which is also down 15 basis points in two days on the plunge in commodity prices. This is also a significant positive for the broad market. Weekly retail same-store-sales rose 2.6% this week versus a 2.5% gain the prior week. Weekly retail sales have averaged a 2.4% gain the past four weeks, up from a .6% average weekly gain during the month of February. I suspect we will build on today’s gains over the coming weeks as earnings come in better-than-feared and energy prices fall further. The massively-shorted (XLF) is soaring over 5% today to session highs. Nikkei futures indicate an +260 open in Japan and DAX futures indicate an +120 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower energy prices and bargain-hunting.