Stocks Lower into Final Hour on Tech Sector Jitters, Profit-Taking, Rising Economic Fear

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Around Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 21.68 -.37%
  
• ISE Sentiment Index 122.0 -13.48%
  
• Total Put/Call .85 -4.49%
  
• NYSE Arms .99 +248.84%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 96.97 bps -4.53%
  
• European Financial Sector CDS Index 111.90 bps -4.35%
  
• Western Europe Sovereign Debt CDS Index 152.0 bps -1.62%
  
• Emerging Market CDS Index 204.67 bps -2.38%
  
• 2-Year Swap Spread 17.0 -1 bp
  
• TED Spread 18.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .11% unch.
  
• Yield Curve 202.0 -5 bps
  
• China Import Iron Ore Spot $144.0/Metric Tonne +1.84%
  
• Citi US Economic Surprise Index -.50 +.7 point.
  
• 10-Year TIPS Spread 1.94% +7 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -6 open in Japan
• DAX Futures: Indicating -9 open in Germany

Portfolio:

• Slightly Lower: On losses in my Tech and Biotech long positions
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades just slightly lower despite more weak economic data and tech sector earnings jitters. On the positive side, Coal, Oil Tanker, Energy, Ag, Gold, I-Banking, Construction, Road&Rail and Airline shares are all higher on the day. Cyclicals are outperforming. (XLF) has traded relatively well throughout the day. Copper is rising another +.85% and Lumber is jumping +3.32%. The Hungary sovereign cds is declining -4.24% to 279.84 bps and the California muni cds is falling -3.51% to 270 bps. Moreover, it is a large positive to see some key cds indices with meaningful declines again today. On the negative side, HMO, Disk Drive, Semi and Computer shares are under meaningful pressure, falling more than 2%. Gold is surging to another new record high at $1,348.60 and the 10-year TIPS spread is moving to the highest level since late June. The 10-year yield continues to fall too much, declining another -8 bps to 2.39%. The Greece sovereign cds is rising +1.36% to 771.52 bps and the Spain sovereign cds is up again, rising +1.15% to 230.68 bps. While action in the tech sector is disappointing overall, significant losses are mainly confined to those cloud computing-related stocks that have had massive run-ups this year. One of my longs, (AAPL), is holding on to recent gains very well. I see still significant upside in the shares from current levels over the intermediate and longer-terms. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, rising QE2 speculation, technical buying, buyout speculation and tax policy/election optimism.