Stocks Surging into Final Hour on Technical Buying, Short Covering, Less Economic Fear, Lower Long-Term Rates

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Technology longs, Financial longs, Biotech longs and Retail 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, every sector is rising and volume is slightly below average. Investor anxiety is very high. Today’s overall market action is bullish. The VIX is falling -1.03% and is high at 23.18. The ISE Sentiment Index is about average at 146.0 and the total put/call is slightly above average at .86. Finally, the NYSE Arms has been running below average most of the day, hitting .31 at its intraday trough, and is currently .67. The Euro Financial Sector Credit Default Swap Index is falling -.81% to 68.14 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 -1.82% to 96.32 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is unch. at 22 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 falling -8.71% to 30.0 basis points. The Libor-OIS spread is unch. at 13 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is unch. at 2.16%, which is down -49 basis points since July 7th. The 3-month T-Bill is yielding .05%, which is unch. today. Small-cap and cyclical shares are outperforming today. Education, Commodity, Airline, Construction, Semi, HMO and REIT stocks are especially strong, rising 2%+. The bears are trying mightily to prevent an S&P 500 close above technical resistance at 1,100. However, I expect it to close above this level, which should lead to further buying later this week. Nikkei futures indicate an +90 open in Japan and DAX futures indicate a -19 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, earnings optimism, less economic fear, technical buying and falling long-term rates.