Stocks Slightly Lower into Final Hour on Rising Economic Fear, Increasing Sovereign Debt Angst, Technical Selling

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Most Declining
  
• Volume: Below Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 25.84 -1.52%
  
• ISE Sentiment Index 94.0 +38.24%
  
• Total Put/Call .91 -7.14%
  
• NYSE Arms 1.62 +36.15%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 109.73 bps +1.62%
  
• European Financial Sector CDS Index 116.50 bps +1.54%
  
• Western Europe Sovereign Debt CDS Index 139.66 bps +2.12%
  
• Emerging Market CDS Index 233.26 bps +2.08%
  
• 2-Year Swap Spread 20.0 unch.
  
• TED Spread 21.0 -1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .15% +1 bp
  
• Yield Curve 208.0 -7 bps
  
• China Import Iron Ore Spot $148.30/Metric Tonne unch.
  
• Citi US Economic Surprise Index -57.30 +.1 point
  
• 10-Year TIPS Spread 1.62% -3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -57 open in Japan
• DAX Futures: Indicating -11 open in Germany

Portfolio:

• Slightly Higher: On gains in my Tech long positions
  
• Disclosed Trades: Covered some of my (IWM)/(QQQQ) hedges and then added them back
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 is trading lower, still below its 50-day moving average, despite a bounce higher in Chinese equities and the euro. On the positive side, Disk Drive, Airline, Steel and Gold stocks are especially strong, rising .75%+. Small-Caps are outperforming. The Libor-OIS and TED spreads continue to trend lower. Tech shares are trading somewhat again better today. Copper is +.7% higher on the day. On the negative side, Education, Insurance, Medical Equipment and I-Banking shares are especially weak, falling .75%+. The Greece sovereign cds is rising +4.92% today to 866.37 bps, the Ireland sovereign cds is jumping another +7.66% to 295.49 bps and the European Investment Grade CDS Index is rising +3.33% to 109.08 bps. The 10-year yield is falling another -10 bps to 2.57%. The market has proven resilient despite today's poor economic data, however volume remains very light and the bulls were unable to capitalize meaningfully on this morning's reversal higher. It appears as though quite a bit of short-covering is going on today. The move higher in the eurozone cds indices has become a worry again. I will closely monitor the market's reaction to tomorrow's economic data and Ireland's government bond auction before further shifting market exposure. I expect US stocks to trade mixed-to-lower into the close from current levels on rising economic fear, sovereign debt concerns, technical selling and China worries.