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

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Almost Every Sector Rising
  
• Volume: Slightly Below Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 17.34 -.63%
  
• ISE Sentiment Index 139.0 +5.30%.
  
• Total Put/Call .79 -10.23%
  
• NYSE Arms .71 +44.09%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 83.51 bps -2.08%
  
• European Financial Sector CDS Index 72.02 bps -2.12%
  
• Western Europe Sovereign Debt CDS Index 78.67 bps n/a
  
• Emerging Market CDS Index 213.62 bps -3.58%
  
• 2-Year Swap Spread 16.0 bps unch.
  
• TED Spread 13.0 -1 basis point
  

Economic Gauges:

• 3-Month T-Bill Yield .16% +1 basis point
  
• Yield Curve 282.0 bps +1 bp
  
• China Import Iron Ore Spot $156.30/Metric Tonne n/a
  
• Citi US Economic Surprise Index +40.10 n/a
  
• 10-Year TIPS Spread 2.30% +3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +71 open in Japan
• DAX Futures: Indicating -6 open in Germany

Portfolio:

• Higher: On gains in my Retail, Financial, Biotech and Tech long positions
  
• Disclosed Trades: Covered all (IWM)/(QQQQ) hedges and some of my (EEM) short
  
• Market Exposure: Moved to 100% Net Long

BOTTOM LINE: Today's overall market action is bullish as stocks trade near session highs, breaking out of the recent trading range, despite higher energy prices and long-term rates. On the positive side, Gaming, Semi, Oil Tanker, REIT, Networking, Steel and Oil Service stocks are especially strong, rising 1.75%+. CDS are mostly lower again. Cyclicals and small-caps are outperforming. On the negative side, Airline, Drug, Medical and Ag shares are lower on the day. Oil is breaking out of its intermediate-term trading range, despite euro weakness. Despite recent cyclical strength, transportation shares continue to underperform. Stocks are overdue for a pullback and investor angst is too subdued, but a meaningful correction will likely come from higher levels. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, technical buying and less economic fear.