Stocks Rising into Final Hour on More Economic Optimism, Less Financial Sector Pessimism, Equity Fund Inflows, Buyout Speculation

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: Around Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 16.94 -2.53%
  
• ISE Sentiment Index 209.0 +100.96%
  
• Total Put/Call .72 +10.77%
  
• NYSE Arms .60 -29.59%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 83.23 +.69%
  
• European Financial Sector CDS Index 161.02 bps +9.55%
  
• Western Europe Sovereign Debt CDS Index 201.17 bps -.29%
  
• Emerging Market CDS Index 195.48 +.72%
  
• 2-Year Swap Spread 21.0 +1 bp
  
• TED Spread 17.0 -1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .13% unch.
  
• Yield Curve 276.0 +3 bps
  
• China Import Iron Ore Spot $171.0/Metric Tonne unch.
  
• Citi US Economic Surprise Index +18.90 +4.0 points
  
• 10-Year TIPS Spread 2.41% +6 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +165 open in Japan
• DAX Futures: Indicating +25 open in Germany

Portfolio:

• Higher: On gains in my Medical, Tech, Ag and Biotech long positions
  
• Disclosed Trades: Added to (GOOG) long, took profits in another long
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is very bullish as the S&P 500 trades higher despite some equity weakness overseas, surging long-term rates, recent stock gains and rising euro sovereign debt concerns. On the positive side, Coal, Oil Service, Internet, Disk Drive, Networking, Wireless, Bank, Hospital, Homebuilding, Gaming, Education and Airline shares are especially strong, rising more than 1.5%. (XLF) is strongly outperforming again. Small-caps and cyclicals are also relatively strong. The Eurozone Investment Grade CDS Index is dropping -3.05% to 85.1 bps, which is the lowest since Nov. 23 and a big positive. The euro currency continues to trade poorly and gold is falling another -.28%. Copper is gaining +.79% and lumber is jumping +3.1%. On the negative side, Semi and Utility shares are under mild pressure. The Greece sovereign cds is climbing +3.03% to 1,062.54 bps, the Hungary sovereign cds is gaining +2.46% to 380.17 bps and the China sovereign cds is rising +2.45% to 67.45 bps. The Euro Financial Sector CDS Index remains near its highest level since mid-June and the Western Europe Sovereign CDS Index is still near a record high. The 10-year yield is surging +14 bps to 3.47%, but is still within its recent range. The broad market continues to trade very well as it grinds higher and the bears remain unable to gain any traction on potential negative catalysts. One of my longs, (MOS), reported excellent earnings after the close yesterday and is rising +2.95%, which puts it back near its 52-week high. I still see further meaningful upside in the shares from current levels over the short/intermediate-term. I expect US stocks to trade mixed-to-higher into the close from current levels on equity fund inflows, short-covering, technical buying, less financial sector pessimism, more economic optimism and buyout speculation.