Stocks Mixed into Final Hour as Rising Oil and Credit Angst Offset Short-Covering and Bargain-Hunting

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Gaming longs, Alternative Energy longs and Medical longs. I added to my (WMS) long and took profits in another long today, thus leaving the Portfolio 100% net long. The tone of the market is mildly negative as the advance/decline line is slightly lower, sector performance is mostly positive and volume is light. Investor anxiety is about average. Today’s overall market action is bullish. The VIX is falling 5.2% and is still above-average at 19.34. The ISE Sentiment Index is about average at 154.0 and the total put/call is about average at .93. Finally, the NYSE Arms has been running below average most of the day and is currently .64. The Euro Financial Sector Credit Default Swap Index is rising 1.5% today to 89.83 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 .96% today to 145.99 basis points. The TED spread is falling 1.91% to 1.11. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 4 basis points to 2.23%, which is still down 40 basis points in about six weeks. Once again, considering the decline in financials and rise in oil, the broad market trades very well. I still believe recent broad market action indicates more of a consolidating of recent gains before another surge higher rather than a topping before another move lower. The many bears have had several days of bad headlines and have not been able to capitalize. One of my longs, Apple Computer(AAPL), is down another 1.1% today and has pulled back 6 points from its recent high. This morning RBC Capital said Mac market share could hit 4.2% in calendar 09. I think this number is very conservative and overall analyst forward estimates are still way too low. The stock looks attractive at current levels for both long and short-term investors, in my opinion. Nikkei futures indicate an +73 open in Japan and DAX futures indicate an +58 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering, less financial sector pessimism and bargain-hunting.