Stocks Slightly Lower into Final Hour on Profit-Taking, More Shorting, Commodity Weakness

Broad Market Tone:

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

Equity Investor Angst:

• VIX 23.09 +1.54%
  
• ISE Sentiment Index 88.0 -2.22%
  
• Total Put/Call .82 -17.17%
  
• NYSE Arms 1.05 +69.44%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 103.23 bps -.41%
  
• European Financial Sector CDS Index 99.23 bps -6.43%
  
• Western Europe Sovereign Debt CDS Index 112.67 bps -5.20%
  
• Emerging Market CDS Index 213.59 bps -4.21%
  
• 2-Year Swap Spread 21.0 -2 bps
  
• TED Spread 34.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .14% -1 bp
  
• Yield Curve 241.0 +1 bp
  
• China Import Iron Ore Spot $136.30/Metric Tonne +2.17%
  
• Citi US Economic Surprise Index -37.9 -.8 point
  
• 10-Year TIPS Spread 1.80% +2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +149 open in Japan
• DAX Futures: Indicating +8 open in Germany

Portfolio:

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

BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades hugs the flat line, despite more disappointing US economic data, recent stock gains and weakness in commodities. On the positive side, Computer, Utility, Telecom and Bank stocks are especially strong, rising .75%+. (XLF) has outperformed throughout the day. The European Investment Grade CDS Index is dropping another -2.33% to 98.58 bps. The UK sovereign cds is falling another -6.53% to 58.61 bps. Moreover, the Spain sovereign cds is falling -8.41% to 177.84 bps, the Greece sovereign cds is declining -4.55% to 714.34 bps and the Portugal sovereign cds is dropping -8.54% to 228.98 bps. The US Municipal CDS Index is dropping -4.76% to 200.0 bps. China Import Iron Ore spot continues its recent move higher after sharp declines and Shanghai copper inventories are falling another -3.96% today. Gold continues to trade poorly. Weekly retail sales rose +2.8% this week versus a +2.9% increase the prior week. It is also a positive to see the 10-year yield moving back above 3%. On the negative side, Steel, Gold, Oil Tanker, Coal and Airline shares are under pressure, falling more than -1.75%. Cyclicals are underperforming. 3-Month Euro Libor is rising slightly again today. Lumber is falling -3.37%. Market leader (AAPL) is trading very well today and looks poised to test its all-time high over the coming weeks. Today's overall action is a healthy consolidation of recent gains. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, diminishing sovereign debt angst, mostly positive earnings reports, buyout speculation and technical buying.