Stocks Slightly Higher into Final Hour on Less Economic Fear, Technical Buying, Short-Covering

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Biotech longs and Medical 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, sector performance is mixed and volume is about average. Investor anxiety is above average. Today’s overall market action is mildly bullish. The VIX is falling -2.92% and is around average at 17.60. The ISE Sentiment Index is slightly above average at 169.0 and the total put/call is below average at .67. Finally, the NYSE Arms has been running around average most of the day, hitting 1.12 at its intraday peak, and is currently .87. The Euro Financial Sector Credit Default Swap Index is falling -4.37% to 54.93 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 falling -2.0% to 76.25 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is up +2 basis points to 23 basis points. The TED spread is now down 440 basis points since its all-time high of 463 basis points on October 10^th, 2008. The 2-year swap spread is falling -2.71% to 26.96 basis points. The Libor-OIS spread is up +1 basis point to 11 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is up +2 basis points to 2.47%, which is down -18 basis points since July 7^th, 2008. The 3-month T-Bill is yielding .02%, which is down -2 basis points today. There are an unusual number of stocks rising on above-average volume again today for a flat broad market. Economically sensitive shares are outperforming again, with the MS Cyclical Index rising .86%. Food, Gaming, Restaurant, REIT, Drug, Biotech, Oil Tanker and Utility shares are especially strong, rising .75%+. On the negative side, some large-cap “growth” stock leaders are substantially underperforming today. Today’s overall action is indicative of another healthy consolidation day. Nikkei futures indicate an +92 open in Japan and DAX futures indicate an +17 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering, less economic fear, technical buying, stable long-term rates and buyout speculation.