Stocks Slightly Higher into Final Hour on Declining Sovereign Debt Angst, Short-Covering, Less Economic Fear

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Technology longs, Medical longs and Biotech longs. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is slightly positive as the advance/decline line is about even, sector performance is mostly positive and volume is above average. Investor angst is high. Today's overall market action is neutral. The VIX is rising +.52% and is around average at 19.15. The ISE Sentiment Index is around average at 138.0 and the total put/call is around average at .86. Finally, the NYSE Arms has been running below average most of the day, hitting .49 at it intraday trough, and is currently .79. The Euro Financial Sector Credit Default Swap Index is falling -4.94% to 80.26 basis points. The North American Investment Grade CDS Index is falling -.48% to 87.37 basis points. The TED Spread is down -2 basis points at 12.0 basis points. The 2-Year Swap Spread is falling -4.76% to 22.50 basis points. The Libor-OIS Spread is rising +1 basis point to 11.0 basis points. The 10-Year TIPS Spread is up +1 basis point to 2.17%. The 3-Month T-Bill is yielding .13%, which is up +1 basis point today. Restaurant, semi and financial shares are relatively weak today. (IYR) has also lagged throughout the day. The euro is finally seeing some short-covering, which is helping to boost energy prices despite another bearish energy inventory report. The euro likely has further near-term upside before resuming its downtrend. On the positive side, Education, HMO, Networking, Gold and Oil Service shares are especially strong, rising 1.0%+. Market leading stocks are also outperforming. The Western Europe Sovereign CDS Index is dropping another -2.57%, which is a big positive. Given the drop in CDS today and some better-than-expected economic data, the market's lethargic reaction is a bit concerning. However, it is probably too soon to conclude that this tired action is indicative of anything more than a healthy consolidation after recent gains. There is noteworthy action in two of my longs today. (ISRG) hit a new all-time high and (HGSI) is surging 4%, which is near a 52-week high. I would be a buyer of both on any market-related pullback in the shares from current levels. Nikkei futures indicate an +32 open in Japan and DAX futures indicate a down -29 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, technical buying, declining sovereign debt angst and less economic fear.