Stocks Higher into Final Hour on Falling Credit Market Angst, Lower Long-Term Rates, Less Economic Fear

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Medical longs, Biotech longs and Retail 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 high. Today’s overall market action is bullish. The VIX is falling 2.06% and is very high at 29.42. The ISE Sentiment Index is below average at 123.0 and the total put/call is about average at .83. Finally, the NYSE Arms has been running high most of the day, hitting 1.68 at its intraday peak, and is currently 1.36. The Euro Financial Sector Credit Default Swap Index is falling another 6.33% today to 104.67 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 dropping another 3.65% to 124.49 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is plunging 7.93% to 51 basis points. The TED spread is now down 412 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is falling 10.42% to 43.0 basis points. The Libor-OIS spread is rising .06% to 45 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 4 basis points to 1.99%, which is down 65 basis points since July 7th. The 3-month T-Bill is yielding .13%, which is up 4 basis points today. The Euro Financial Sector Credit Default Swap Index is now at the lowest level since early January, which is a large positive. Given the capital raising news, the (XLF) trades pretty well today and is near session highs. The (XLF) has been consolidating gains over the last three weeks. I suspect another surge up through its 200-day moving average will occur very soon. The NYSE Arms is high again today, despite gains in the major averages, which is also a positive. One of my longs, (ISRG), is breaking above its 200-day moving average on decent volume today for the first time since July 2008. I still see substantial upside in the shares over the intermediate/long-term. Nikkei futures indicate an +76 open in Japan and DAX futures indicate a +16 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, declining credit market angst, investment manager performance anxiety, technical buying, lower long-term rates and less economic fear.