Stocks Lower into Final Hour on Eurozone Debt Worries, Rising Economic Fears, China Concerns, Technical Selling

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Mixed
  
• Volume: Below Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 25.86 +.51%
  
• ISE Sentiment Index 67.0 -44.63%
  
• Total Put/Call .97 -2.02%
  
• NYSE Arms 1.01 -17.09%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 107.98 bps -2.39%
  
• European Financial Sector CDS Index 115.66 bps -1.0%
  
• Western Europe Sovereign Debt CDS Index 136.0 bps -.72%
  
• Emerging Market CDS Index 225.81 bps -.29%
  
• 2-Year Swap Spread 20.0 +1 bp
  
• TED Spread 22.0 -1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .14% unch.
  
• Yield Curve 215.0 -4 bps
  
• China Import Iron Ore Spot $148.30/Metric Tonne unch.
  
• Citi US Economic Surprise Index -57.40 -1.3 points
  
• 10-Year TIPS Spread 1.65% -3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -28 open in Japan
• DAX Futures: Indicating +13 open in Germany

Portfolio:

• Slightly Higher: On gains in my Tech and Ag long positions
  
• Disclosed Trades: None
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 is trading lower, below its 50-day moving average, despite a bounce in Asian equities and positive economic data from Germany. On the positive side, Airline, Gaming, Computer and Paper stocks are especially strong, rising .75%+. The S&P GSCI Ag Spot Index is rising another +.5%. The Libor-OIS and TED spreads continue to trend lower. Tech shares are trading somewhat better today. On the negative side, Education, Alt Energy, Gold, Wireless and I-Banking shares are especially weak, falling .75%+. Small-caps have underperformed throughout the day. Some key stocks are trading poorly. The UK sovereign cds is up +8.6% today and has risen +22.8% over the last five days to 71.59 bps. Moreover, the Greece sovereign cds is rising +3.0% today to 841.80 bps. The 10-year yield is falling -7 bps, back near Wed.'s lows, to 2.68%. Copper is also falling -1.0% today and the euro continues to trade poorly despite its recent sell-off and Germany's positive economic data. With volume so light, it is hard to read too much into today's action, but the averages still feel a bit heavy and trading is very sloppy. I will wait to see the market's reaction to Monday's economic data before further shifting market exposure. I expect US stocks to trade mixed-to-lower into the close from current levels on more shorting, rising economic fear, sovereign debt concerns, technical selling and China worries.