Stocks Slightly Higher into Final Hour on Tech Sector Strength, Buyout Speculation, QE2 Expectations, Tax Policy/Election Optimism

Broad Market Tone:

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

Equity Investor Angst:

• VIX 19.90 +.10%
  
• ISE Sentiment Index 160.0 +66.67%
  
• Total Put/Call .76 -6.17%
  
• NYSE Arms 1.27 -15.83%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 98.45 bps +.31%
  
• European Financial Sector CDS Index 105.0 bps +9.67%
  
• Western Europe Sovereign Debt CDS Index 138.83 bps -.36%
  
• Emerging Market CDS Index 202.25 bps +3.97%
  
• 2-Year Swap Spread 18.0 unch.
  
• TED Spread 15.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .13% unch.
  
• Yield Curve 220.0 +8 bps
  
• China Import Iron Ore Spot $152.70/Metric Tonne unch.
  
• Citi US Economic Surprise Index -3.30 +.8 point
  
• 10-Year TIPS Spread 2.14% unch.
  

Overseas Futures:

• Nikkei Futures: Indicating +45 open in Japan
• DAX Futures: Indicating +8 open in Germany

Portfolio:

• Higher: On gains in my Medical, Retail, Tech and Biotech 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 slightly higher on some better economic data and tech sector strength. On the positive side, Retail, HMO, Hospital, Biotech, Disk Drive, Computer, Software and Internet shares are especially strong, rising .5%+. The MS Tech Index is +.86% higher on the day. "Growth" stocks are strongly outperforming "value" shares today. Copper is rising +.43% despite euro weakness. The Shanghai Composite jumped +3.2% overnight, breaking convincingly above its 200-day moving average. Gold is falling -.94% and the 10-year yield is rising +5 bps, which are also positives. The Portugal sovereign cds is falling another -3.82% to 358.69 bps and the US sovereign cds is falling -5.87% to 39.71 bps. On the negative side, Bank, Gold, Alt Energy, Homebuilding and Education shares are under pressure, falling more than 2.0%. (XLF) is underperforming badly again. While the jump in the Euro Financial Sector CDS Index is a concern, it is still -11.54% lower over the last 5 days. One of my longs. (GOOG), reported excellent earnings last night. I still believe the company has much better longer-term growth prospects than investors currently perceive. The broad market remains very resilient given housing/bank worries and China trade concerns. I still expect another meaningful push higher in the major averages before the election. I expect US stocks to trade modestly higher into the close from current levels on falling sovereign debt angst, buyout speculation, rising QE2 expectations, tech sector strength and tax policy/election optimism.