Stocks Mostly Higher into Final Hour on Less Economic Fear, Short-Covering, Bargain-Hunting

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Most Sectors Declining
  
• Volume: Above Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 28.45 -1.28%
  
• ISE Sentiment Index 115.0 +38.55%
  
• Total Put/Call 1.11 +8.82%
  
• NYSE Arms 1.79 +182.99%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 103.88 bps +1.40%
  
• European Financial Sector CDS Index 116.50 bps -1.78%
  
• Western Europe Sovereign Debt CDS Index 120.33 bps +1.12%
  
• Emerging Market CDS Index 240.50 bps +.34%
  
• 2-Year Swap Spread 31.0 +3 bps
  
• TED Spread 28.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .15% unch.
  
• Yield Curve 269.0 +1 bp
  
• China Import Iron Ore Spot $175.30/Metric Tonne -.11%
  
• Citi US Economic Surprise Index +14.40 -.3 point
  
• 10-Year TIPS Spread 2.26% +2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +49 open in Japan
• DAX Futures: Indicating +10 open in Germany

Portfolio:

• Slightly Higher: On gains in my Biotech, Retail and Medical long positions
  
• Disclosed Trades: Covered all of my (IWM), (QQQQ) hedges and then added them back
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish as equities trade slightly high despite more euro weakness and China bubble fears. On the positive side, HMO, Road/Rail, Gaming, Hospital, Biotech, Bank, Networking, Gold and Oil Serivce stocks are especially strong, rising .75%+. Small-caps are strongly outperforming, with the Russell 2000 rising +1.1%. The Greece sovereign cds is falling -8.08% to 542.42 bps and the Portugal sovereign cds is dropping -12.5% to 229.70 bps. Oil is falling -1.24% on euro weakness and worries over China demand. Weekly retail sales rose +3.3% this week, up from a +2.4% gain the prior week. On the negative side, I-Banking, Education, Internet, Paper, Steel, Ag, Energy and Coal shares are underperforming today, falling .75%+. The Shanghai Composite continues to trade poorly and is now in a technical bear market. The Latin America Economic Surprise Index is falling to -15.50 today, which is the lowest since Dec . 23, 2009. Most gauges of credit angst are moving higher today. The S&P 500 came close to its 50-day moving average during today's rally. However, I suspect the euro and Chinese stocks will need to stabilize before a clear break above this level is in the offing. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less economic fear and bargain-hunting.