Stocks Lower into Final Hour on Rising Sovereign Debt Angst, Increasing Financial Sector Pessimism, Tech Sector Earnings Worries, Profit-Taking

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Slightly Above Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 22.73 +1.70%
  
• ISE Sentiment Index 111.0 +7.77%
  
• Total Put/Call .88 -9.28%
  
• NYSE Arms 1.28 +2.50%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 111.0 bps +3.51%
  
• European Financial Sector CDS Index 129.62 bps +12.82%
  
• Western Europe Sovereign Debt CDS Index 1578.0 bps +1.34%
  
• Emerging Market CDS Index 234.19 bps -1.81%
  
• 2-Year Swap Spread 19.0 unch.
  
• TED Spread 14.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .15% unch.
  
• Yield Curve 211.0 -5 bps
  
• China Import Iron Ore Spot $139.50/Metric Tonne +.22%.
  
• Citi US Economic Surprise Index -8.0 +.9 points.
  
• 10-Year TIPS Spread 1.88% +4 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -91 open in Japan
• DAX Futures: Indicating +22 open in Germany

Portfolio:

• Slightly Lower: On losses in my Tech, Biotech and Medical long positions
  
• Disclosed Trades: None
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades just modestly lower despite recent sharp equity gains, rising financial sector pessimism, increasing economic fear and sovereign debt worries. On the positive side, Utility, Coal, Ag, Gold and Retail shares are especially strong, rising .5%+. Select large-cap technology growth stock leaders continue to trade much better than the broad market despite (ADBE)'s disappointment. Lumber is rising another +4.31%. Copper is jumping +2.48%. On the negative side, Airline, Insurance, I-Banking, Bank, Disk Drive, Semi, Computer and Software shares are under pressure, falling more than 1.25%. Small-caps are underperforming. (XLF) and (IYR) have been a bit heavy throughout the day again. The Euro Financial Sector CDS Index is soaring for the third day in a row and close to a technical breakout, gaining another +12.82%, which is a major negative. The Portugal sovereign cds is rising +6.11% to 391.36 bps, which is a meaningful technical breakout. The Ireland sovereign cds is continuing its recent parabolic move higher, rising another +4.74% to a record of 453.21 bps. The UK sovereign cds is gaining +6.3% to 72.53 bps and the US sovereign cds is rising +4.93% to 49.41 bps. Furthermore, key credit default swap indices continue to move higher, even as equities trend higher, which is also a large negative. Oil continues to trade poorly given the euro's strength and the 10-year yield has dropped -26 bps from last Friday's high in yield. The Shanghai Composite was closed last night. Spain's IBEX 35 was -1.93% today and appears to be rolling over. (ADBE)'s harsh stock reaction to downward guidance is also a broad market negative. The rise in the euro and tech sector leadership strength are holding the bears back today. Given what is happening to eurozone cds, I suspect the euro is getting close to another meaningful top. I expect US stocks to trade mixed-to-lower into the close from current levels on rising economic fear, tech sector earnings worries, sovereign debt angst, profit-taking, more shorting and increasing financial sector pessimism.