Stocks Near Session Highs into Final Hour on Less Economic Fear, Short-Covering, Earnings Optimism

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Most Rising
  
• Volume: About Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 16.04 -7.50%
  
• ISE Sentiment Index 146.0 +5.04%
  
• Total Put/Call .93 +3.33%
  
• NYSE Arms .81 +32.17%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 85.80 bps -4.03%
  
• European Financial Sector CDS Index 84.34 bps -2.81%
  
• Western Europe Sovereign Debt CDS Index 90.83 bps -3.20%
  
• Emerging Market CDS Index 207.09 bps -1.09%
  
• 2-Year Swap Spread 15.0 bps unch.
  
• TED Spread 17.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .14% -1 bp
  
• Yield Curve 279.0 bps -3 bps
  
• China Import Iron Ore Spot $180.80/Metric Tonne +.78%
  
• Citi US Economic Surprise Index +23.50 -.3 point
  
• 10-Year TIPS Spread 2.35% +2 bp
  

Overseas Futures:

• Nikkei Futures: Indicating +120 open in Japan
• DAX Futures: Indicating +5 open in Germany

Portfolio:

• Higher: On gains in my Retail, Medical, Financial and Tech long positions
  
• Disclosed Trades: Added (IWM)/(QQQQ) hedges, added to my (EEM) short
  
• Market Exposure: Moved to 75% Net Long

BOTTOM LINE: Today's overall market action is bullish as equities trade at session highs despite some weakness in market leading stocks and ongoing worries over Greece. On the positive side, Gaming, Homebuilding, Construction, Hospital, Oil Service, Energy, Oil Tanker and Bank stocks are especially strong, rising 2.0%+. Small-Caps are outperforming. (XLF) and (IYR) have outperformed throughout most of the day. The euro is trading near session lows and continues to trade poorly. The decline in most cds indices is a large positive. Weekly retail sales rose +3.0% this week versus a +3.3% gain the prior week and down from a +3.9% increase two weeks ago. On the negative side, Gold, I-Bank, Computer Service, Computer Hardware and Drug shares are falling on the day. The Greece 10-year/bund spread is gaining +1.47% to 467 basis points. The Greece sovereign cds is rising another +.25% today. Investor angst gauges are still registering near-term complacency. Tech shares are underperforming on (IBM) and ahead of (AAPL). While I expect a very good quarter from (AAPL), the stock's technical set-up has been better ahead of past earnings releases. I expect US stocks to trade mixed-to-lower into the close from current levels on more shorting, profit-taking and china hard-landing fears.