Stocks Rising into Final Hour on Short-Covering, Less Economic Pessimism, Lower Commodity Prices

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Computer longs, Alternative Energy longs, Medical longs and Gaming longs. I have not traded 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 5.58% and is still above-average at 19.96. The ISE Sentiment Index is slightly below average at 139.0 and the total put/call is above average at 1.0. Finally, the NYSE Arms has been running about average most of the day and is currently .86. The Euro Financial Sector Credit Default Swap Index is rising 1.95% today to 82.33 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 .61% today to 130.67 basis points. The TED spread is rising 9.61% to 1.17. The 10-year TIPS spread, a good gauge of inflation expectations, is falling another 2 basis points to 2.23%, which is the lowest since May 1st and down 40 basis points in about a month. Growth stocks are especially strong today, with many leaders posting 2%+ gains. It is very good to see the broad market able to rally without the help of the financials or another substantial decline in oil. The Citi eurozone economic surprise index has fallen to -168.20, while the US index remains in positive territory at +22.6. The US Dollar Index continues to trade very well and is poised to close above its 200-day moving average for the first time since March 2006. The index is in a mild resistance zone right now, but should punch through this area easily over the coming months as US economic data continue to show mild improvement, while other major economies slow further. Even after falling 20% from its high, oil was unable to even bounce today, which bodes well for further declines in the much-loved commodity. As well, agricultural commodities remain very weak, falling another 1.94% today. The S&P Goldman Agriculture Commodity Spot Index is now down 22.9% in less than five months. Inflation gauges should show huge improvement over the coming months, as a result. Two of my longs, (PWR) and (WMS), reported earnings and are trading substantially higher today. I think both are still very attractive at current levels. Nikkei futures indicate an +66 open in Japan and DAX futures indicate an +69 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on less economic pessimism, short-covering and lower commodity prices.