Stocks Soaring into Final Hour on Technical Buying, Less Economic Fear, Short-Covering, Diminishing Financial Sector Pessimism

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Technology longs, Financial longs and Biotech 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, almost every sector is gaining and volume is slightly above average. Investor anxiety is high. Today’s overall market action is very bullish. The VIX is falling .88% and is high at 24.87. The ISE Sentiment Index is below average at 124.0 and the total put/call is below average at .60. Finally, the NYSE Arms has been running low most of the day, hitting .20 at its intraday trough, and is currently .30. The Euro Financial Sector Credit Default Swap Index is falling another 3.92% today to 86.99 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 3.97% to 115.39 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is falling 6.99% to 24 basis points. The TED spread is now down 442 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is rising .15% to 41.63 basis points. The Libor-OIS spread is falling 9.35% to 20 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 4 basis points to 1.89%, which is down 77 basis points since July 7th. The 3-month T-Bill is yielding .16%, which is unch. today. Energy, Oil Service, Insurance, Homebuilding, Gaming and Airline shares are especially strong today, rising 3%+. As well, the Transports are jumping 2.7% as the MS Cyclical Index surges another 2.6%. Credit angst gauges are mostly back to normal levels now, which is a large broad market positive. The US sovereign debt credit default swap index is plunging another 11.5% today to 23.0 basis points, which is a new low and a big positive. With the jump in commodities and positive existing home sales report today, I would expect to see Asian shares rally Sunday night. As well, the Chicago PMI, released Monday before the open, should move into positive territory, which will likely prompt another positive US stock open. Nikkei futures indicate an +300 open in Japan and DAX futures indicate a -6 open in Germany on Monday. I expect US stocks to trade mixed-to-higher into the close from current levels on less economic fear, short-covering, technical buying, diminishing financial sector pessimism and investment manager performance anxiety.