Stocks Slightly Higher into Final Hour on Falling Sovereign Debt Fear, Less Financial Sector Pessimism, Short-Covering, Technical Buying

Broad Market Tone:

• Advance/Decline Line: Slightly Higher
  
• Sector Performance: Mixed
  
• Volume: Around Average
  
• Market Leading Stocks: Mixed
  

Equity Investor Angst:

• VIX 17.67 +1.44%
  
• ISE Sentiment Index 120.0 -5.51%
  
• Total Put/Call .95 +13.10%
  
• NYSE Arms 1.04 +154.81%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 83.02 bps -3.74%
  
• European Financial Sector CDS Index 72.65 bps -7.56%
  
• Western Europe Sovereign Debt CDS Index 68.56 bps -7.01%
  
• Emerging Market CDS Index 234.65 bps -2.92%
  
• 2-Year Swap Spread 23.0 bps unch.
  
• TED Spread 11.0 bps unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .14% unch.
  
• Yield Curve 281.0 bps +3 bps
• Copper Days Demand 15.25 days -.31%
• Citi US Economic Surprise Index +23.40 unch.
  
• 10-Year TIPS Spread 2.23% +1 basis point
  

Overseas Futures:

• Nikkei Futures: Indicating +40 open in Japan
• DAX Futures: Indicating +9 open in Germany

Portfolio:

• Slightly Higher: On strength in Retail, Financial and Tech long positions
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish as stocks consolidate recent gains. On the positive side, (IYR) has traded well throughout the day. Tech shares are also outperforming. The ongoing decline in credit default swaps remains a huge positive. The Libor-OIS spread is falling to 6.0 basis points today to the lowest since August 2006. On the negative side, Airline, Gold and Coal stocks are notably weak on the day. The 10-year yield is continuing its recent creep higher. Shanghai copper inventories have surged 23.5% over the last 5 days to the highest levels since Dec. 19th, 2009. As well, copper days demand remains near the highest level since January 2004, which is also a negative. I expect US stocks to trade mixed-to-higher into the close from current levels on less economic fear, short-covering, lower sovereign debt angst, technical buying and diminishing financial sector pessimism.