Stocks Mixed into Final Hour as Short-Covering, Less Economic Fear, Diminishing Healthcare Reform Worries Offset Profit-Taking, Earnings Shortfalls

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Medical longs, Biotech longs and Technology longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is neutral as the advance/decline line is about even, most sectors are rising and volume is above average. Investor anxiety is very high. Today’s overall market action is mildly bullish. The VIX is falling .68% and is high at 23.27. The ISE Sentiment Index is below average at 116.0 and the total put/call is slightly above average at .93. Finally, the NYSE Arms has been running around average most of the day, hitting 1.43 at its intraday peak, and is currently .88. The Euro Financial Sector Credit Default Swap Index is dropping another 5.44% today to 79.99 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is rising 1.86% to 121.35 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is falling .58% to 32 basis points. The TED spread is now down 434 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is unch. at 43.50 basis points. The Libor-OIS spread is rising .04% to 31 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is falling 4 basis points to 1.88%, which is down 76 basis points since July 7th. The 3-month T-Bill is yielding .18%, which is unch. today. The Euro Financial Sector Credit Default Swap Index is continuing its recent plunge, falling to the lowest level since August 19^th, 2008, which remains a large positive. The market’s resilience today (especially the Naz) is very impressive given the disappointments from (MSFT), (AMZN) and (BRCM). Many sectors are higher, with healthcare-related, airline, insurance and alternative energy shares especially strong. As well, the MS Cyclical Index is rising another 1.1%. Many heavily-shorted stocks have experienced stunning advances over the last couple of weeks, which has likely left many shorts trigger-happy. I expect further healthy consolidating broad market action next week before another push higher commences. Nikkei futures indicate an +150 open in Japan and DAX futures indicate an +25 open in Germany on Monday. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, investment manager performance anxiety, technical buying, diminishing government healthcare reform worries and less economic fear.