Stocks Higher into Final Hour on Lower Energy Prices, Short Covering, Technical Buying

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Retail longs and Medical longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is slightly positive as the advance/decline line is mildly lower, most sectors are rising and volume is slightly below average. Investor anxiety is very high. Today’s overall market action is mildly bullish. The VIX is falling -1.54% and is high at 22.31. The ISE Sentiment Index is below average at 121.0 and the total put/call is above average at .89. Finally, the NYSE Arms has been running above average most of the day, hitting 1.23 at its intraday peak, and is currently 1.09. The Euro Financial Sector Credit Default Swap Index is falling -.76% to 71.82 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 -1.70% to 96.07 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is unch. at 23 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 falling -2.11% to 34.88 basis points. The Libor-OIS spread is falling -1 basis point to 10 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is up +1 basis point to 2.13%, which is down -52 basis points since July 7th. The 3-month T-Bill is yielding .02%, which is unch. today. “Growth” stocks are outperforming “value” shares today. Road & Rail, restaurant, retail, hmo, medical equipment, wireless, oil service, energy, coal and utility stocks are especially strong today, rising 1.0%+. Falling oil and lower temperatures are spurring consumer discretionary shares. The bears have been unable to gain any real traction today despite relative weakness in (IYR) and (XLF). I suspect ongoing uncertainties over Dubai and (C) are weighing on these shares. It is a large positive to see various CDS indexes remaining subdued despite these uncertainties. One of my longs, (GOOG), said today that “YouTube will be profitable in the not so distant future.” Its profitability will prove more of a positive catalyst to the shares than most analysts expect, in my opinion. Nikkei futures indicate an +108 open in Japan and DAX futures indicate an -14 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short covering, lower energy prices, technical buying and seasonal strength.