Stocks Mostly Higher into Final Hour on Less Economic Fear, Lower Long-Term Rates, Short-Covering

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: Heavy
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 15.83 +1.54%
  
• ISE Sentiment Index 197.0 +19.39%
  
• Total Put/Call .72 +30.91%
  
• NYSE Arms 1.19 +68.89%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 81.82 bps -2.85%
  
• European Financial Sector CDS Index 73.82 bps -.41%
  
• Western Europe Sovereign Debt CDS Index 83.67 bps -1.28%
  
• Emerging Market CDS Index 205.75 bps -1.98%
  
• 2-Year Swap Spread 14.0 bps +1 bp
  
• TED Spread 15.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .15% unch.
  
• Yield Curve 282.0 bps +1 bp
  
• China Import Iron Ore Spot $175.70/Metric Tonne +.75%
  
• Citi US Economic Surprise Index +34.40 -3.3 points
  
• 10-Year TIPS Spread 2.36% +2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +47 open in Japan
• DAX Futures: Indicating +18 open in Germany

Portfolio:

• Higher: On gains in my Retail and Tech long positions
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is bullish as stocks trade mildly higher on good volume despite ongoing worries over European sovereign debt and weakness in (IYR). On the positive side, Alt Energy, Disk Drive, Airline, Computer Hardware, Internet and Paper stocks are especially strong, rising .75%+. Small-cap shares are outperforming. The Transports are making another 52-week high, rising +1.85%. The 10-year yield is -2 bps lower on the day despite the rally in equities and positive economic data, which is a large positive. On the negative side, Bank, REIT, Steel and Coal shares are underperforming, falling 1.0%+. (IYR) is especially heavy, falling -2.4%. The Portugal sovereign cds is rising another +3.76%. Shanghai copper inventories are hitting another new high, rising +9.46% today. They have risen 36.26% in the last five days. Investor angst gauges are registering some near-term complacency again. One of my longs, (GOOG), reports earnings after the close today. At about 21x conservative forward estimates, I plan to add to my long on any significant negative kneejerk reaction to the report ahead of meaningful positive catalysts later this year. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower long-term rates, investment manager performance anxiety and less economic fear.