Stocks Slightly Lower into Final Hour on Profit-Taking, More Economic Pessimism, More Shorting

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Mixed
  
• Volume: Around Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 25.14 +2.36%
  
• ISE Sentiment Index 104.0 +22.35%
  
• Total Put/Call .94 +13.25%
  
• NYSE Arms 1.44 +172.59%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 108.50 bps -.85%
  
• European Financial Sector CDS Index 120.54 bps +2.36%
  
• Western Europe Sovereign Debt CDS Index 130.66 bps unch.
  
• Emerging Market CDS Index 240.96 bps +2.17%
  
• 2-Year Swap Spread 30.0 +1 bp
  
• TED Spread 38.0 -1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .14% unch.
  
• Yield Curve 244.0 -1 bp
  
• China Import Iron Ore Spot $117.60/Metric Tonne unch.
  
• Citi US Economic Surprise Index -25.3 +.7 point
  
• 10-Year TIPS Spread 1.85% -3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -15 open in Japan
• DAX Futures: Indicating -5 open in Germany

Portfolio:

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

BOTTOM LINE: Today's overall market action is neutral as the S&P 500 holds onto recent sharp gains, but fails to respond positively to Intel's strong report and tech sector strength. On the positive side, HMO, Networking, Oil Tanker, Defense, Ag, Internet, Software, Computer and Disk Drive stocks are especially strong, rising .75%+. Tech and transport shares are outperforming. The US Muni CDS Index is falling another -3.74% to 218.04 bps, which is also a big positive. Singapore Electronics Exports rose +43.9% in June, the largest % gain since Bloomberg record keeping began in June 1998. The European Investment Grade CDS Index is falling another -2.17% to 108.0 bps. The S&P GSCI Ag Spot Index is breaking convincingly higher through its 200-day moving average, rising another +.93%. On the negative side, REIT, Homebuilding, Construction, Bank, Paper and Steel shares are under pressure, falling more than -1.0%. (XLF)/(IYR) have underperformed throughout the day. The 10-year yield is falling a bit too much, declining -7 basis points to session lows. The Spain sovereign cds is rising +3.5% to 217.10 bps. The market remains short-term overbought and will likely consolidate recent gains before an attempt to push up throw the S&P 500 200-day moving average occurs. I expect US stocks to trade mixed-to-higher into the close from current levels on bargain-hunting, tech sector optimism and less hostile political rhetoric.