Stocks Surging into Final Hour on Less Economic Fear, Technical Buying, Short-Covering, Less Sovereign Debt Angst

Broad Market Tone:

• Advance/Decline Line: Sharply Higher
  
• Sector Performance: Almost Every Sector Higher
  
• Volume: Around Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 17.37 -7.21%
  
• ISE Sentiment Index 127.0 +14.41%
  
• Total Put/Call .88 -12.0%
  
• NYSE Arms .48 -42.61%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 86.25 bps -2.84%
  
• European Financial Sector CDS Index 77.10 bps -1.19%
  
• Western European Sovereign Debt CDS Index 73.72 bps -3.67%
  
• Emerging Market CDS Index 242.44 bps -4.37%
  
• 2-Year Swap Spread 23.0 bps -1.08%
  
• TED Spread 11.0 bps -1 basis point
  

Economic Gauges:

• 3-Month T-Bill Yield .14% +1 basis point
  
• Yield Curve 278.0 bps +3 bps
• Copper Days Demand 15.30 days -.14%
• Citi US Economic Surprise Index +23.40 +11 points
  
• 10-Year TIPS Spread 2.22% +4 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +187 open in Japan
• DAX Futures: Indicating +11 open in Germany

Portfolio:

• Higher: On strength in Retail, Medical, Financial, Biotech and Tech long positions
• Disclosed Trades: Covered all of my (IWM)/(QQQQ) hedges, some of my (EEM) short and added slightly to my (RUE) long
  
• Market Exposure: Moved to 100% Net Long

BOTTOM LINE: Today's overall market action is very bullish. On the positive side, (XLF) has traded well throughout the day, with (IYR) also joining in today. Some key stocks continue to break out technically with select small-caps exhibiting explosive upside moves. The Russell 2000 is now up +6.6% YTD. The ongoing decline in credit default swaps remains a huge positive. It is noteworthy that the 10-year TIPS spread is still 27 bps off its January 11th high, despite the recent rise in commodities, improving economic stats and equity rebound. The euro is bouncing today, but still trades heavy given recent events. On the negative side, telecom and oil tanker stocks are lower on the day and software shares are lagging. The 10-year yield likely has more upside over the next few months as the negative effects of record winter weather subside and census hiring accelerates through June. The yield will likely peak again around mid-year. One of my longs, (AAPL), is surging to a new record high today on volume. The NASDAQ's forward p/e is currently 19.5. At 18.5x conservative forward estimates and with improving fundamentals, AAPL still has significant upside from current levels. The stock, arguably the best large-cap growth company in the world, deserves a premium valuation and I expect it to finally be awarded one over the next 12 months. I expect US stocks to trade mixed-to-higher into the close from current levels on less economic fear, short-covering, lower sovereign debt angst, technical buying and diminishing financial sector pessimism.