Stocks Soaring into Final Hour on Diminishing Healthcare Reform Worries, Short-Covering, Technical Buying, Less Economic Fear and Earnings Optimism

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Biotech longs, Technology longs and Financial longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, most sectors are rising and volume is heavy. Investor anxiety is very high. Today’s overall market action is very bullish. The VIX is rising 1.36% and is high at 23.79. The ISE Sentiment Index is low at 90.0 and the total put/call is about average at .85. Finally, the NYSE Arms has been running around average most of the day, hitting .97 at its intraday peak, and is currently .80. The Euro Financial Sector Credit Default Swap Index is dropping another 6.72% today to 82.33 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 3.88% to 119.13 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is rising .58% to 32 basis points. The TED spread is now down 434 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is falling .15% to 42.94 basis points. The Libor-OIS spread is falling .37% to 31 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 11 basis points to 1.92%, which is down 72 basis points since July 7th. The 3-month T-Bill is yielding .18%, which is unch. today. The market is exploding higher through technical resistance today on good volume. Gaming, REIT, Homebuilding, Insurance, Biotech, Alt Energy, Construction, Bank, Telecom, Networking and Oil Service stocks are all posting very strong 3.5%+ gains. The AAII % Bulls rose to 37.6%, while the % Bears fell to 42.4% this week, which remains a large positive given recent market gains. As well, the ISE Sentiment Index hit an extraordinarily low 67.0 this morning and the VIX is actually rising this afternoon, despite today’s huge surge, which is also a big positive. The Euro Financial Sector Credit Default Swap Index is continuing its recent plunge, falling to the lowest level since August 8^th, 2008, which remains a large positive. It is noteworthy that the US Dollar is slightly higher on the day, which is very bullish considering today’s stock gains and better economic sentiment. This may portend a trading move higher in the currency, which would prevent another economic recovery-killing move higher in energy prices. Record short interest and much-better-than expected earnings are sending shares of my of my long-held longs, (ISRG), skyrocketing 26%. While the stock is extended short-term, I expect it to move substantially higher from current levels over the intermediate/long-term. Nikkei futures indicate an +278 open in Japan and DAX futures indicate an +16 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, investment manager performance anxiety, technical buying, diminishing government healthcare reform worries and earnings optimism.