Stocks Rising into Final Hour on Falling Credit Market Angst, Less Financial Sector Pessimism, Lower Energy Prices, Bargain-Hunting, Short-Covering

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Education longs and Retail longs. I have not traded today, thus leaving the Portfolio 100% 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 about average. Investor anxiety is about average. Today’s overall market action is bullish. The VIX is falling 3.11% and is very high at 42.99. The ISE Sentiment Index is above average at 179.0 and the total put/call is below average at .75. Finally, the NYSE Arms has been running around average most of the day, hitting 1.21 at its intraday peak, and is currently .74. The Euro Financial Sector Credit Default Swap Index is falling 1.89% today to 190.67 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is falling 3.29% to 239.20 basis points. This index is still below its Dec. 5^th record high of 285.99. The TED spread is rising .63% to 110 basis points. The TED spread is now down 353 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is falling 7.24% to 70.50 basis points. The Libor-OIS spread is falling 1.47% to 106.0 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 2 basis points to .90%, which is down 174 basis points since July 7th. The 10-year TIPS spread bottomed at .65% in October 1998 during the Asian financial crisis and at 1.24% in October 2001 during the technology bubble-bursting meltdown. The 3-month T-Bill is yielding .22%, which is down 1 basis point today. Market leading stocks are substantially outperforming the broad market today. As I said near the beginning of the year, I continue to believe the tech sector will outperform over the intermediate-term. The MS Tech Index is jumping another 3.1% today. One of my longs, (AAPL) is 6% higher today on new product news and speculation. I still believe the shares will be substantially higher than current levels at year-end. The (XLF) continues to trade very well, which is always a huge positive. Today’s action bodes well for further broad market gains over the short-term. Nikkei futures indicate an +40 open in Japan and DAX futures indicate an +1 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, declining credit market angst, bargain-hunting, tech sector optimism and less financial sector pessimism.