Stocks Surging into Final Hour on Less Eurozone Debt Angst, Diminishing Financial Sector Pessimism, More Economic Optimism, Technical Buying

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 16.46 -2.55%
  
• ISE Sentiment Index 169.0 +6.29%
  
• Total Put/Call .83 -1.19%
  
• NYSE Arms .54 -32.59%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 83.51 -3.21%
  
• European Financial Sector CDS Index 162.86 bps -6.55%
  
• Western Europe Sovereign Debt CDS Index 210.75 bps -2.32%
  
• Emerging Market CDS Index 200.83 -2.65%
  
• 2-Year Swap Spread 23.0 -2 bps
  
• TED Spread 16.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .14% unch.
  
• Yield Curve 276.0 unch.
  
• China Import Iron Ore Spot $175.40/Metric Tonne +.46%
  
• Citi US Economic Surprise Index +36.40 -.3 point
  
• 10-Year TIPS Spread 2.39% -1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating +98 open in Japan
• DAX Futures: Indicating +8 open in Germany

Portfolio:

• Higher: On gains in my Medical, Ag, Retail and Tech long positions
  
• Disclosed Trades: Covered all of my (IWM)/(QQQQ) hedges and some of my (EEM) short
  
• Market Exposure: Moved to 100% Net Long

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades at a new 52-week high, despite ongoing eurozone debt fears, US housing market concerns and emerging market inflation worries. On the positive side, Airline, Education, Homebuilding, Construction, Drug, I-Banking, Bank, Computer Service, Networking, Semi, Computer, Steel, Ag, Oil Service and Alt Energy shares are especially strong, rising more than 1.0%. (XLF) is strongly outperforming again. Copper is gaining +1.41% and Lumber is rebounding +1.2% today. The Italy sovereign cds is falling -6.27% to 228.56 bps, the Russia sovereign cds is declining -3.95% to 139.73 bps, the Spain sovereign cds is falling -4.94% to 333.10 bps, the Portugal sovereign cds is declining -4.17% to 514.52 bps, the Belgium sovereign cds is falling -6.62% to 230.99 bps and the US Muni CDS Index is falling -6.58% to 213.23 bps. Moreover, the European Investment Grade CDS Index is dropping -5.35% to 89.79 bps, which is also a huge positive. The 10-year yield is stable, rising +2 bps to 3.36%, despite today's global equity rally. On the negative side, Coal, Oil Tanker, HMO and Gaming shares are under mild pressure, falling more than .5%. (IYR) has underperformed throughout the day. The UBS-Bloomberg Ag Spot Index is hitting a record high today, rising +2.0%,which is especially worrisome for emerging markets. The Japan sovereign cds is rising another +.15% to 81.59 bps, which is the highest level since July 21st of last year. The Euro Financial Sector CDS Index is pulling back again today, but is still trending higher. The Western Europe Sovereign CDS Index is still just slightly below its record high set on Monday. Investor sentiment gauges are still registering too much short-term complacency, which is also a negative. The broad market continues to trade very well, displaying exceptional resiliency. I expect US stocks to trade modestly higher into the close from current levels on declining eurozone debt angst, diminishing financial sector pessimism, technical buying, more economic optimism, short-covering and less US muni debt angst.