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

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 very positive as the advance/decline line is substantially higher, almost every sector is rising and volume is above average. Investor anxiety is very high. Today’s overall market action is very bullish. The VIX is falling 4.96% and is very high at 25.51. The ISE Sentiment Index is below average at 121.0 and the total put/call is around average at .77. Finally, the NYSE Arms has been running around average most of the day, hitting 1.51 at its intraday peak, and is currently .76. The Euro Financial Sector Credit Default Swap Index is falling -3.84% today to 70.33 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 declining -1.95% to 100.53 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is up 2 basis points to 22 basis points. The TED spread is now down 443 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is -.18% to 34.50 basis points. The Libor-OIS spread is unch. at 13 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is up +3 basis points to 1.76%, which is down 91 basis points since July 7th. The 3-month T-Bill is yielding .07%, which is down 2 basis points today. Today’s gains are broad-based, with market leaders outperforming. I-Banking, Coal, Alt Energy, Oil Tanker, Energy, Oil Service, Semi, Internet and Gold shares are especially strong, rising 2%+. The US Sovereign Debt CDS is falling back to its low at 20.0 basis points, which is also a positive. On of my longs, market leader (AAPL), is breaking out to a new 52-week high today on above-average volume. I still don’t think it is too late to purchase these shares around current levels and see substantial upside in the stock over the long-term. The broad market took a dip around mid-day on negative (GS) rumors. I doubt the validity of these concerns. Recent market action must be extremely frustrating for the many bears. After a brief pause, I suspect another broad market surge higher before week’s end on short-covering. Nikkei futures indicate an +100 open in Japan and DAX futures indicate a -9 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less financial sector pessimism, diminishing economic fear, technical buying and bargain-hunting.