Stocks Falling into Final Hour on Rising Sovereign Debt Angst, Increasing Economic Fear, Tax Hike Concerns, Financial Sector Pessimism

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Slightly Below Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 35.71 +.65%
  
• ISE Sentiment Index 97.0 +14.12%
  
• Total Put/Call .98 +2.08%
  
• NYSE Arms 1.66 -86.53%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 128.65 bps +5.01%
  
• European Financial Sector CDS Index 179.78 bps +8.98%
  
• Western Europe Sovereign Debt CDS Index 141.83 bps -5.86%
  
• Emerging Market CDS Index 293.99 bps -.17%
  
• 2-Year Swap Spread 46.0 -1 bp
  
• TED Spread 43.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .11% -1 bp
  
• Yield Curve 245.0 -3 bps
  
• China Import Iron Ore Spot $147.50/Metric Tonne unch.
  
• Citi US Economic Surprise Index +4.90 -3.3 points
  
• 10-Year TIPS Spread 1.96% -1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating -31 open in Japan
• DAX Futures: Indicating -10 open in Germany

Portfolio:

• Slightly Lower: On losses in my Technology long positions
  
• Disclosed Trades: None
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is very bearish as the S&P 500 trades near session lows and appears to be breaking down from its recent range. On the positive side, Utility, Gold, Telecom, REIT and Food stocks are rising. On the negative side, Education, Gaming, Homebuilding, Construction, I-Banking, Networking, Semi, Disk Drive, Coal, Alt Energy, Oil Tanker and Steel shares are under significant pressure, falling more than -2.0%. The tech sector has traded heavy throughout the day. Copper and Ag commodities continue to trade very poorly. The Hungary sovereign cds is soaring +11.07% to 400.58 bps, the China sovereign cds is jumping +10.7% to 94.65 bps, the Japan sovereign is rising +6.2% to 98.71 bps and the Spain sovereign cds is gaining +3.95% to 267.06 bps. Moreover, the Emerging Markets Sovereign CDS is soaring +14.3% to 260.80 bps. It is also a big negative to see the Eurozone Investment Grade CDS Index rising another +4.97% to 127.71 bps. Like Friday, today's decline is on only mediocre volume and is a bit too orderly to indicate some sort of capitulation, in my opinion. Action is the tech sector is also worrisome. I expect US stocks to trade mixed-to-lower into the close from current levels on rising economic pessimism, more shorting, technical selling, rising financial sector pessimism, increasing sovereign debt angst and tax hike worries.