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

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Medical longs, Biotech longs, Retail longs and Financial longs. I covered all of my (IWM)/(QQQQ) hedges and some of my (EEM) short, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, almost every sector is rising and volume is about average. Investor anxiety is high. Today’s overall market action is bullish. The VIX is falling -5.09% and is above-average at 21.43. The ISE Sentiment Index is below average at 119.0 and the total put/call is around average at .86. Finally, the NYSE Arms has been running around average most of the day, hitting 1.07 at its intraday peak, and is currently .73. The Euro Financial Sector Credit Default Swap Index is falling -.46% to 81.92 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 -1.63% to 93.56 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is unch. at 16 basis points. The TED spread is now down 447 basis points since its all-time high of 463 basis points on October 10^th, 2008. The 2-year swap spread is rising +3.63% to 28.56 basis points. The Libor-OIS spread is unch. at 10 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is up +1 basis point to 2.39%, which is down -26 basis points since July 7^th, 2008. The 3-month T-Bill is yielding .09%, which is +1 basis point today. Small-caps are underperforming again today. Many market leading stocks are also underperforming. The US sovereign debt cds is rising 4.88% to 43.0 basis points, which is at the high end of its 7-month trading range. On the positive side, Homebuilding, Airline, Computer, Steel and Disk Drive shares are especially strong, rising 2.0%+. The market is rising in spite of some pretty negative headlines of late, which is always a big positive. However, I would like to see an improvement in market breadth/volume, less bearish action in Asian equities and better technical action in market leading US stocks. I will be quick to increase my hedges on any signs that the current bounce is faltering. Nikkei futures indicate an +120 open in Japan and DAX futures indicate a +26 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, technical buying, bargain-hunting and less economic fear.