Stocks Slightly Higher into Final Hour on Tax Policy/Election Optimism, QE2 Expectations, Less Financial Sector Pessimism, Diminishing Economic Fear

Broad Market Tone:

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

Equity Investor Angst:

• VIX 21.05 +1.64%
  
• ISE Sentiment Index 128.0 +64.10%
  
• Total Put/Call .87 +3.57%
  
• NYSE Arms 1.22 +36.21%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 93.99 bps -.77%
  
• European Financial Sector CDS Index 94.92 bps +1.22%
  
• Western Europe Sovereign Debt CDS Index 145.17 bps +1.87%
  
• Emerging Market CDS Index 202.48 bps -2.15%
  
• 2-Year Swap Spread 15.0 -1 bp
  
• TED Spread 16.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .12% -1 bp
  
• Yield Curve 229.0 -2 bps
  
• China Import Iron Ore Spot $149.60/Metric Tonne -.13%
  
• Citi US Economic Surprise Index -.50 +1.2 points
  
• 10-Year TIPS Spread 2.16% unch.
  

Overseas Futures:

• Nikkei Futures: Indicating +4 open in Japan
• DAX Futures: Indicating +16 open in Germany

Portfolio:

• Higher: On gains in my Tech, Medical and Biotech long positions
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades near session highs despite recent gains, some earnings disappointments and eurozone sovereign debt worries. On the positive side, Gaming, Education, Hospital, I-Banking, Steel, Oil Tanker, Software, Drug and Gold shares are especially strong, rising 1.0%+. Lumber is rising +3.17% and copper is gaining +.24%. The 10-year yield is rising +8 bps to 2.72%. On the negative side, Disk Drive, Computer, Oil Service and Alt Energy shares are under pressure, falling more than 1.0%. The Ireland sovereign cds is rising +5.07% to 460.24 bps and the Portugal sovereign cds is gaining +4.81% to 363.21 bps. The Emerging Markets Sovereign CDS Index is rising +5.09% to 194.28 bps. The broad market continues to consolidate recent gains on below average volume, which is healthy. Most negative news is still being ignored, while positives continue to be rewarded. Even early weakness in Naz heavyweight (AAPL) couldn't provide the bears badly needed traction in the tech sector. Moreover, the DJIA is almost back in positive territory despite substantial weakness in (MMM). I suspect stocks will end the day higher tomorrow after the release of the 3Q GDP report. I expect US stocks to trade modestly higher into the close from current levels on tax policy/election optimism, less economic fear, short-covering, buyout speculation, less financial sector pessimism and earnings optimism.