Stocks Rising Slightly Into Final Hour on Seasonal Strength, Short-Covering, Investor Performance Angst

Broad Market Tone:

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

Equity Investor Angst:

• VIX 17.88 +1.19%
  
• ISE Sentiment Index 162.0 +33.88%
  
• Total Put/Call .78 +1.30%
  
• NYSE Arms .81 -16.80%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 85.68 -.37%
  
• European Financial Sector CDS Index 152.41 bps -.04%
  
• Western Europe Sovereign Debt CDS Index 192.75 bps -1.74%
  
• Emerging Market CDS Index 206.51 +.14%
  
• 2-Year Swap Spread 19.0 -3 bps
  
• TED Spread 16.0 -2 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .14% +2 bps
  
• Yield Curve 273.0 +5 bps
  
• China Import Iron Ore Spot $170.70/Metric Tonne unch.
  
• Citi US Economic Surprise Index +6.50 -5.4 points
  
• 10-Year TIPS Spread 2.31% +2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +48 open in Japan
• DAX Futures: Indicating +19 open in Germany

Portfolio:

• Slightly Higher: On gains in my Medical, Tech, Retail and Ag 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 despite recent stock gains, China inflation worries, soaring long-term rates and some disappointing economic data. On the positive side, Bank, Energy, I-Banking, Medical Equipment and Drug shares are especially strong, rising more than .5%. (IYR) is trading very well again today. Copper is climbing +.99% despite the Chinese rate hike, some weaker economic data and declining euro. Moreover, the S&P GSCI Ag Spot Index is rising another +1.25% to another new record high. The TED and 2-year swap spreads have been trending lower over the last week, which is a big positive. On the negative side, Education, Oil Tanker, Homebuilding, Hospital, Gaming, Disk Drive and Steel shares are under mild pressure, falling more than .5%. The Greece sovereign cds is climbing +1.69% to 1,053.52 bps and the Emerging Markets Sovereign CDS Index is jumping +3.07% to 198.l20 bps. The Euro Financial Sector CDS Index remains at the highest level since mid-June and the Western Europe Sovereign CDS Index remains very near its record high set last month, which is also a big negative. Gold is surging +1.64% and the 10-year yield is soaring +14 bps to 3.47%. The Shanghai Composite continues to trade poorly, breaking down through its 200-day moving average overnight. The broad market continues to display exceptional resiliency as most negatives are ignored. Today's broad market action is another healthy consolidation of recent gains. I expect US stocks to trade mixed-to-higher into the close from current levels on seasonal strength, short-covering, technical buying, buyout speculation and investment manager performance angst.