Stocks Higher into Final Hour on Reveral Higher in Financial Shares, Less Economic Pessimism

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Internet longs, Computer longs, Biotech longs and Emerging Market shorts. I took profits in a long and a short today, thus leaving the Portfolio 100% net long. The tone of the market is mildly negative as the advance/decline line is slightly lower, sector performance is mixed and volume is heavy. Investor anxiety is above-average. Today’s overall market action is mildly bullish. The VIX is rising .42% and remains above average at 24.05. The ISE Sentiment Index is very low at 85.0 and the total put/call is above average at 1.01. Finally, the NYSE Arms has been running around average most of the day and is currently .86. The Euro Financial Sector Credit Default Swap Index is rising 5.16% today to 95.87 basis points. This index is up from a low of 52.66 on May 5^th, but down from 129.46 basis points on March 20^th. The North American Investment Grade Credit Default Swap Index is rising 3.05% today to 140.73, which is also a negative. However, the TED spread is falling 11.30% to .93. The heavily-shorted (XLF) is attempting to trim losses into the final hour again. At the very least, I suspect we have begun a tradable rally. However, a meaningful reversal lower in oil over the coming weeks may make today’s low more significant. Market leading growth stocks are exceptionally strong today. These types of stocks should lead the market through the remainder of the year. One of my longs, (AAPL), is surging 3.8% today. I think this stock has seen its lows for the year and will trade substantially higher by year-end. Nikkei futures indicate a -48 open in Japan and DAX futures indicate an +60 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering, better economic data, a reversal in the financial sector and bargain-hunting.