Stocks Higher into Final Hour on Fund Inflows, Stable Long-Term Rates/Energy Prices, Technical Buying, Earnings Optimism

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Almost Every Sector Rising
  
• Volume: Slightly Above Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 16.61 +1.47%
  
• ISE Sentiment Index 152.0 +46.15%
  
• Total Put/Call .93 +6.90%
  
• NYSE Arms 1.11 +27.64%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 79.95 -1.33%
  
• European Financial Sector CDS Index 127.67 bps -5.62%
  
• Western Europe Sovereign Debt CDS Index 174.83 bps -.76%
  
• Emerging Market CDS Index 220.59 -.94%
  
• 2-Year Swap Spread 20.0 -1 bp
  
• TED Spread 20.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .11% -1 bp
  
• Yield Curve 278.0 unch.
  
• China Import Iron Ore Spot $191.90/Metric Tonne +.68%
  
• Citi US Economic Surprise Index +63.90 -3.5 points
  
• 10-Year TIPS Spread 2.28% -1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating +72 open in Japan
• DAX Futures: Indicating +13 open in Germany

Portfolio:

• Higher: On gains in my Ag, Biotech, Medical 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 very bullish as the S&P 500 trades at new multi-year highs, despite recent equity gains, inflation concerns, Mideast saber-rattling and US housing worries. On the positive side, Homebuilding, Construction, HMO, Hospital, Medical, Wireless, Networking, Semis, Computer, Steel, Ag, Oil Service, Oil Tanker, Alt Energy and Coal shares are especially strong, rising more than 1.0%. Small-Caps are outperforming. The Transports are relatively strong again, rising +.98% to another new multi-year high. Tech shares are also strongly outperforming today. Despite a strong euro, Mideast saber-rattling, inflation worries, an equity rally and its technically oversold state, oil is just +.39% higher on the day. The 10-year yield is stable at 3.62% despite today's "hot" inflation readings and intensifying concerns over the US budget deficit. The US Muni CDS Index is dropping -5.2% to 168.07 bps, which is also a large positive. On the negative side, Telecom, Internet and Utility shares are lower on the day. Copper is falling -.88%. Shanghai copper inventories have surged +21.04% over the last 5 days. The Japan sovereign cds is rising +2.84% to 79.98 bps. The fact that oil and long-term rates are contained despite potential upside catalysts is surprising and a big positive. While tomorrow's core CPI will likely also exceed estimates, I suspect any morning equity weakness will be met with dip-buying once again, barring any additional Mideast flare-ups overnight. US equities remain extraordinarily resilient to any potential headwinds. I expect US stocks to trade mixed-to-higher into the close from current levels on earnings optimism, US fund inflows, stable long-term rates, stable energy prices, buyout speculation, technical buying and short-covering.