Stocks Finish Near Session Highs, Boosted by Construction, HMO, Homebuilder, Commodity and Airline Shares

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In Play

Stocks Slightly Lower into Final Hour on Profit-Taking, Tech Sector Weakness

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Internet longs, Biotech longs and Medical longs. I added to my (GOOG) long and took profits in a trading long today, thus leaving the Portfolio 100% net long. The tone of the market is neutral as the advance/decline line is mildly lower, most sectors are rising and volume is above average. Investor anxiety is high. Today’s overall market action is bullish. The VIX is falling 2.74% and is very elevated at 62.80. The ISE Sentiment Index is low at 103.0 and the total put/call is slightly below average at .75. Finally, the NYSE Arms has been running high most of the day, hitting 1.59 at its intraday peak, and is currently .90. The Euro Financial Sector Credit Default Swap Index is rising 1.04% today to 113.0 basis points. This index is up from a low of 52.66 on May 5^th, but down from 157.81 on Sept. 16^th. The North American Investment Grade Credit Default Swap Index is down 2.58% to 248.29 basis points. The TED spread is falling 2.95% to 209 basis points. The TED spread is now down 255 basis points in under six weeks. The 2-year swap spread is plunging 12.75% to 97.50 basis points. The Libor-OIS spread is rising 4.48% to 177 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 8 basis points to .31%, which is down 231 basis points in under five months and at the lowest level since Bloomberg record-keeping began in August 1998. The 10-year TIPS spread bottomed at .65% in October 1998 during the Asian financial crisis and at 1.24% in October 2001 during the technology bubble-bursting meltdown. The 3-month T-Bill yield is rising 9 basis points to .10%. Many market-leading stocks are substantially outperforming the major indices again today. Breadth has been pretty good all day, even when the averages were at their lows. Homebuilder, airline, construction, HMO and select commodity stocks are posting 4%+ gains again today. Given the DJIA is still 1,000 points off its recent lows, today’s consolidating action is very healthy. While US stocks are a bit extended very short-term, they are still VERY oversold on an intermediate-term basis. I expect the many momentum chasers and those funds with massive piles of cash to begin to jump in at higher levels as another sharp sell-off fails to materialize and the belief in a meaningful year-end rally gains traction. Nikkei futures indicate an +17 open in Japan and DAX futures indicate a -13 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on less financial sector pessimism, diminished forced selling, short-covering, bargain-hunting, technical buying and seasonal strength. Blogging will be light over the next few days due to a scheduling conflict. I hope everyone has a good Thanksgiving holiday. Thanks for reading!

Bear Radar

Style Underperformer:
Large-cap Growth (-1.73%)

Sector Underperformers:
REITs (-5.10%), Computer Hardware (-3.66%) and Software (-3.52%)

Stocks Falling on Unusual Volume:
HTX, AMSC, UNFI, RTP, IIT, WCN, CRT, THS and CCK

Stocks With Unusual Put Option Activity:
1) IDCC 2) AIV 3) OMC 4) CCK 5) SUN

Bull Radar

Style Outperformer:
Large-cap Value (+.44%)

Sector Outperformers:
Homebuilders (+6.21%), Airlines (+3.38%) and HMOs (+2.22%)

Stocks Rising on Unusual Volume:
BHP, BBL, STRL, BHLB, NWSB, AGNC, COHR, CBRL, PTNR, DLTR, GOOG, AAUK, WPPGY, GYMB, PTRY, CETV, FWLT, ATHR, TMW, IHE, HOG, BBL, IWD and LTM

Stocks With Unusual Call Option Activity:
1) CTX 2) IDCC 3) SLM 4) M 5) CHKP

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