Stocks Slightly Lower into Final Hour on Profit-Taking, Rising Financial Sector Pessimism, Increasing Sovereign Debt Angst, More Shorting

Broad Market Tone:

• Advance/Decline Line: About Even
  
• Sector Performance: Most Declining
  
• Volume: Above Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 17.34 +4.33%
  
• ISE Sentiment Index 167.0 +15.97%
  
• Total Put/Call .66 -5.71%
  
• NYSE Arms 1.43 +14.87%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 89.08 bps -.34%
  
• European Financial Sector CDS Index 102.65 bps +6.34%
  
• Western Europe Sovereign Debt CDS Index 109.17 bps +8.99%
  
• Emerging Market CDS Index 212.91 bps +.70%
  
• 2-Year Swap Spread 20.0 +2 bps
  
• TED Spread 17.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .15% unch.
  
• Yield Curve 275.0 +1 bp
  
• China Import Iron Ore Spot $182.10/Metric Tonne -1.46%
  
• Citi US Economic Surprise Index +19.70 -3.8 points
  
• 10-Year TIPS Spread 2.36% -1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating +25 open in Japan
• DAX Futures: Indicating -6 open in Germany

Portfolio:

• Slightly 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 neutral as equities trade mildly lower despite rising sovereign debt angst and increasing financial sector pessimism. On the positive side, Gaming and REIT stocks are especially strong, rising .75%+. Cyclicals are relatively strong again. (IYR) has outperformed throughout most of the day. On the negative side, Education, Homebuilding, HMO, Bank, I-Bank and Medical shares are under meaningful pressure, falling 1.0%+. The Greece sovereign cds is rising another +15.3% today to 734.22.0 bps and the Portugal sovereign cds is jumping +12.12% to 308.46 bps. Another big jump in the euro financial sector cds index is also bares close monitoring. I expect US stocks to trade modestly lower into the close from current levels on profit-taking, rising financial sector pessimism, increasing sovereign debt fear and more shorting.