Stocks Mixed into Final Hour as Lower Long-Term Rates, Falling Energy Prices Offset Profit-Taking, Economic Worries

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Biotech longs and Financial longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is neutral as the advance/decline line is slightly lower, sector performance is mixed and volume is about average. Investor anxiety is very high. Today’s overall market action is mildly bullish. The VIX is falling 3.50% and is high at 24.80. The ISE Sentiment Index is around average at 158.0 and the total put/call is around average at .78. Finally, the NYSE Arms has been running above average most of the day, hitting 1.36 at its intraday peak, and is currently 1.21. The Euro Financial Sector Credit Default Swap Index is rising +7.42% today to 74.67 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 rising 4.46% to 105.01 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is up 1 basis point to 23 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 +2.81% to 34.25 basis points. The Libor-OIS spread is unch. at 13 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is down -1 basis point to 1.75%, which is down 92 basis points since July 7th. The 3-month T-Bill is yielding .05%, which is down 2 basis points today. A number of market leading stocks are substantially outperforming the broad market today. Education, HMO, Hospital, Bank, Networking, Internet and Oil Service shares are especially strong, rising .75%+. Considering recent supply, the fall in long-term rates is a big positive and should continue to assist in a housing recovery. (XLF) has been trading well throughout the day, despite numerous scary commercial real estate stories over the last 24 hours. Oil continues to trade poorly, as it has since June, despite numerous potential upside catalysts. One of my longs, (GOOG), is breaking out to a new 52-week high today on volume. I still see significant upside in (GOOG) over both the short and long-run. It is highly unlikely we will see a meaningful broad market decline imminently with several key stocks breaking out. Nikkei futures indicate a -49 open in Japan and DAX futures indicate an +2 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering, less financial sector pessimism, technical buying, lower energy prices, falling long-term rates and bargain-hunting.