Stocks Surging into Final Hour on Less Tech Sector Pessimism, Short-Covering, Technical Buying, Lower Energy Prices

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: Slightly Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 18.08 -5.69%
  
• ISE Sentiment Index 186.0 +151.35%
  
• Total Put/Call .91 +5.81%
  
• NYSE Arms .62 -45.02%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 95.28 -2.10%
  
• European Financial Sector CDS Index 103.86 -2.90%
  
• Western Europe Sovereign Debt CDS Index 169.0 bps -.64%
  
• Emerging Market CDS Index 210.48 -4.29%
  
• 2-Year Swap Spread 21.0 +1 bp
  
• TED Spread 23.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .08% -1 bp
  
• Yield Curve 272.0 +3 bps
  
• China Import Iron Ore Spot $166.40/Metric Tonne +.54%
  
• Citi US Economic Surprise Index +53.8 -4.0 points
  
• 10-Year TIPS Spread 2.48% +9 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +110 open in Japan
• DAX Futures: Indicating +20 open in Germany

Portfolio:

• Higher: On gains in my Biotech, Tech, Retail and Medical longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short
  
• Market Exposure: Moved to 100% Net Long

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 breaks above its 50-day moving average and trades at session highs, despite high energy prices, US housing worries, growing Mideast unrest and Japan concerns. On the positive side, Education, Gaming, Retail, Construction, HMO, Biotech, Wireless, Networking, Disk Drive, Semi, Computer and Software shares are especially strong, rising 2.0%+. Tech shares are strongly outperforming. The Transports are also relatively strong today. Gold is falling -1.0%, lumber is rising +1.44% and oil is down -.4%. The China Iron Ore Spot Index has begun to firm. The Japan sovereign cds is falling -3.87% to 99.01 bps, the Hungary sovereign cds is falling -2.83% to 263.77 bps and the Belgium sovereign cds is declining 2.13% to 142.46 bps. On the negative side, Homebuilding shares are lower on the day. (IYR)/(XLF) have underperformed throughout the day again. The UBS-Bloomberg Spot Ag Index is rising +1.67%. US price for a gallon of gas is unch. today at $3.55/gallon. It is up .43/gallon in 37 days. The euro continues to trade very well, considering the news, which is very surprising. Volume and breadth remain poor given the extent of the recent equity rally, however leadership is improving. Reports of easing tech supply chain worries from (AAPL) and (DELL), combined with (RHT)'s strong earnings, are boosting tech stocks today, which is a major positive. I would be surprised to see strong reports from (RIMM)/(ORCL) after the close, which could provide a better entry for tech shares in the morning. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, technical buying, lower energy prices, less tech sector pessimism, more economic optimism and bargain-hunting.