Stocks Rising into Final Hour on Rising Economic Optimism, Short-Covering, Declining Eurozone Debt Angst

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: Slightly Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 19.80 -1.20%
  
• ISE Sentiment Index 181.0 +84.69%
  
• Total Put/Call 1.03 -3.74%
  
• NYSE Arms 1.02 -35.41%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 84.34 +.49%
  
• European Financial Sector CDS Index 141.37 bps -4.89%
  
• Western Europe Sovereign Debt CDS Index 177.17 bps -3.97%
  
• Emerging Market CDS Index 223.83 -.79%
  
• 2-Year Swap Spread 23.0 +1 bp
  
• TED Spread 16.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .14% unch.
  
• Yield Curve 282.0 +4 bps
  
• China Import Iron Ore Spot $185.60/Metric Tonne +.16%
  
• Citi US Economic Surprise Index +28.70 +.5 point
  
• 10-Year TIPS Spread 2.32% +6 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +8 open in Japan
• DAX Futures: Indicating +23 open in Germany

Portfolio:

• Slightly Higher: On gains in my Ag, Biotech and Tech long positions
  
• Disclosed Trades: None
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades higher, despite rising Mideast tensions, higher energy prices, emerging markets inflation worries and rising long-term rates. On the positive side, Road&Rail, Gaming, REIT, Construction, Steel, Oil Service, Energy and Coal shares are especially strong, rising more than 1.0%. (XLF)/(IYR) have traded well throughout the day. Copper is rising +1.83%. The Spain sovereign cds is falling -6.36% to 248.93 bps, the Italy sovereign cds is dropping -3.40% to 180.09 bps, the Portugal sovereign cds is falling -4.91% to 433.37 bps and the Ireland sovereign cds is falling -3.43% to 597.67 bps. Gold is -.37% lower on the day. On the negative side, Airline, Retail, Homebuilding and Oil Tanker shares are under pressure, falling more than -.5%. Tech shares are underperforming. Emerging market stocks(EEM) continue to trade poorly. The Japan sovereign cds is rising +2.17% to 84.21 bps, the Saudi sovereign cds is gaining +28.1% to 119.70 bps and the Egypt sovereign cds is climbing +7.8% to 421.27 bps. The UBS-Bloomberg Ag Spot Index is rising +1.22% to another new record high. Oil surged into the close of floor-trading and is up about +3% today. The 10-Year yield is rising +6 bps to 3.38%. The major averages are displaying exceptional resiliency again. If oil stays below $100/bbl., the major averages will likely test recent highs over the coming days. Any convincing break above $100/bbl. would likely result in a meaningful pullback in the major averages from current levels. I expect US stocks to trade mixed-to-lower into the close from current levels on profit-taking, rising long-term rates, more shorting, emerging markets inflation fears, rising Mideast social unrest and surging oil prices.