Stocks Higher into Final Hour on Less Financial Sector Pessimism, Lower Energy Prices, Diminishing Credit Angst

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Healthcare longs and Medical longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are rising and volume is below average. Investor anxiety is above average. Today’s overall market action is mildly bullish. The VIX is falling 7.59% and is very high at 42.23. The ISE Sentiment Index is below average at 106.0 and the total put/call is below average at .73. Finally, the NYSE Arms has been running around average most of the day, hitting 1.21 at its intraday peak, and is currently .88. The Euro Financial Sector Credit Default Swap Index is falling .90% today to 111.0 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 falling 2.49% to 199.0 basis points. The TED spread is falling 3.02% to 105 basis points. The TED spread is now down 361 basis points in over three months. The 2-year swap spread is falling 3.58% to 64.0 basis points. The Libor-OIS spread is rising 1.50% to 96 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is up 5 basis points to .82%, which is down 188 basis points in over six months and near 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 is yielding .13%, which is up 3 basis points today. The 10-year T-note is trading as if it is forming another bottom around current levels. As well, the CRB Index appears to be rolling over again at its 50-day moving average. The (XLF) is trading much better now that the majority of earnings’ releases are out of the way. Healthcare-related stocks are top performers today. I continue to overweight these shares. Nikkei futures indicate an +60 open in Japan and DAX futures indicate an +26 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower energy prices, bargain-hunting and declining credit market angst.