Stocks Surging into Final Hour on Technical Buying, Lower Long-Term Rates, Short-Covering, Diminishing Healthcare Reform Fears

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Biotech longs and Medical 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 heavy. Investor anxiety is very high. Today’s overall market action is bullish. The VIX is falling 2.67% and is high at 23.67. The ISE Sentiment Index is below average at 136.0 and the total put/call is above average at .91. Finally, the NYSE Arms has been running above average most of the day, hitting 1.51 at its intraday peak, and is currently .80. The Euro Financial Sector Credit Default Swap Index is falling 2.87% today to 77.33 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 2.11% to 112.21 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is falling .63% to 16 basis points. The TED spread is now down 447 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is falling 1.92% to 32.0 basis points. The Libor-OIS spread is falling 2.81% to 13 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is falling 7 basis points to 1.77%, which is down 90 basis points since July 7th. The 3-month T-Bill is yielding .14%, which is unch. today. Cyclical shares are especially strong today. The Transports are jumping 2.1%. Oil Service, Oil Tanker, Gold, Internet, Networking, Hospital, HMO and Airline stocks are also outperforming substantially, rising 2%+. The (XLF) opened lower and had been a drag on the averages earlier in the day, however it is trading at session highs and looks poised to regain upside traction. The AAII % Bulls fell to 37.0% this week, while the % Bears jumped to 44.0%, which is a large positive considering the major averages are at their highs for the year. The S&P 500 is currently trading almost 7 points above the 1,035 level that had been meaningful technical resistance over the last few weeks. A close above this level should lead to further near-term gains. One of my longs, (DISCA), is jumping 4% today to an ALL-TIME high. I still see more upside in the shares over both the near-term and long-term. Nikkei futures indicate an +57 open in Japan and DAX futures indicate an +13 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on diminishing economic fear, declining healthcare reform worries, short-covering, technical buying, falling long-term rates and investment manager performance anxiety.