Stocks Higher into Final Hour on Short-Covering, Dovish Bernanke Comments, Less Financial Sector Pessimism

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Technology longs, Financial longs and Retail longs. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are rising and volume is around average. Investor angst is very high. Today's overall market action is mildly bullish. The VIX is falling -3.04% and is above average at 20.72. The ISE Sentiment Index is below average at 110.0 and the total put/call is slightly above average at .86. Finally, the NYSE Arms has been running around average most of the day, hitting .99 at it intraday peak, and is currently .92. The Euro Financial Sector Credit Default Swap Index is rising +.20% to 92.41 basis points. The North American Investment Grade CDS Index is rising +.87% to 93.74 basis points. The TED Spread is down -1 basis point to 14.0 basis points. The 2-Year Swap Spread is down -19.41% to 22.94 basis points. The Libor-OIS Spread is unch. at 9.0 basis points. The 10-Year TIPS Spread is down -1 basis point to 2.20%. The 3-Month T-Bill is yielding .11%, which is unch. today. Hospital, Homebuilding, Disk Drive, Ag and Oil Service shares are all lower on the day. Market leading stocks are mixed. I am seeing an abnormal number of conflicting moves today in various stocks and sectors. The Western Europe Sovereign CDS Index is rising another +3.2%. Portugal and Greece sovereign cds are both rising around +5.0%, which is also a large negative. The euro continues to trade heavy, giving up most of today's Bernanke-related comment gains. On the positive side, Education, Retail, Bank, Semi and Oil Tanker shares are all rising +1.25%+ today. (XLF) has traded well throughout the day. Given the negative economic data again today out of Europe/US and another rise in key CDS indices, I am very surprised by the market's strength. This resiliency is a big positive. Nikkei futures indicate an +32 open in Japan and DAX futures indicate an up +7 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less financial sector pessimism and diminishing Fed rate hike concerns.