Stocks Slightly Higher into Final Hour on Less Financial Sector Pessimism, Short-Covering, Lower Energy Prices

Broad Market Tone:

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

Equity Investor Angst:

• VIX 18.85 +.64%
  
• ISE Sentiment Index 102.0 -25.5%
  
• Total Put/Call 1.03 +17.05%
  
• NYSE Arms .85 -10.07%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 88.77 bps +1.6%
  
• European Financial Sector CDS Index 80.93 bps +.24%
  
• Western European Sovereign Debt CDS Index 76.49 bps -.34%
  
• Emerging Market CDS Index 253.09 bps -1.80%
  
• 2-Year Swap Spread 22.44 bps -3.2%
  
• TED Spread 12.0 bps unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .13% unch.
  
• Yield Curve 275.0 bps -6 bps
• Copper Days Demand 15.32 days -.81%
• Citi US Economic Surprise Index +12.40 -3.88%
• 10-Year TIPS Spread 2.18% unch.
  

Overseas Futures:

• Nikkei Futures: Indicating +75 open in Japan
• DAX Futures: Indicating +2 open in Germany

Portfolio:

• Higher: On strength in Retail and Tech long positions
• Disclosed Trades: Added to my (SXCI) long and added to an existing emerging market short
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish. It looks like another healthy consolidation day. On the positive side, (XLF) has traded well throughout the day. Some key stocks continue to grind higher with select small-caps exhibiting explosive upside moves. Considering the disappointing pending home sales report, drop in commodities and jump in the US dollar, today's equity action is more impressive. On the negative side, gaming, airline, homebuilding, hmo and commodity stocks are under pressure. CDS have likely seen most of their declines. I expect US stocks to trade mixed-to-higher into the close from current levels on less economic fear, short-covering, diminishing financial sector pessimism and lower energy prices.