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

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Technology longs, Medical longs, Biotech longs and Financial longs. I covered all my (IWM)/(QQQQ) hedges and some of my (EEM) short 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 around average. Investor anxiety is very high. Today’s overall market action is bullish. The VIX is falling 7.11% and is high at 26.65. The ISE Sentiment Index is below average at 115.0 and the total put/call is around average at .80. Finally, the NYSE Arms has been running below average most of the day, hitting .50 at its intraday trough, and is currently .60. The Euro Financial Sector Credit Default Swap Index is falling -3.45% today to 74.16 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 -6.61% to 102.53 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is unch. at 20 basis points. The TED spread is now down 445 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is unch. at 34.75 basis points. The Libor-OIS spread is up +1 basis point to 13 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is up +2 basis points to 1.73%, which is down 94 basis points since July 7th. The 3-month T-Bill is yielding .09%, which is unch. today. The S&P 500 found meaningful technical support right at its 50-day moving average. The MS Cyclical Index is substantially outperforming today, jumping +3.11%. Gaming, REIT, Hospital, Bank, Disk Drive, Steel, Gold and Coal shares are especially strong, rising +2.75%+. The big decline in the North American Inv. Grd. CDS Index is a large positive. As well, the (XLF) trades very well, surging +3.22% to session highs. I suspect we will see strength in Asia and Europe materialize before the US opening bell tomorrow, which could lead to further gains here. Nikkei futures indicate an +121 open in Japan and DAX futures indicate an +35 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.