Stocks Higher into Final Hour on More Economic Optimism, Strong Earnings, Stable Energy Prices, Technical Buying

Broad Market Tone:

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

Equity Investor Angst:

• VIX 16.72 -3.35%
  
• ISE Sentiment Index 138.0 +24.32%
  
• Total Put/Call .83 +12.16%
  
• NYSE Arms .92 -43.58%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 83.01 -.40%
  
• European Financial Sector CDS Index 130.67 bps -4.81%
  
• Western Europe Sovereign Debt CDS Index 160.83 bps -.10%
  
• Emerging Market CDS Index 212.03 +.39%
  
• 2-Year Swap Spread 21.0 -1 bp
  
• TED Spread 17.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .14% -1 bp
  
• Yield Curve 284.0 +1 bp
  
• China Import Iron Ore Spot $185.60/Metric Tonne unch.
  
• Citi US Economic Surprise Index +46.80 +4.8 points
  
• 10-Year TIPS Spread 2.33% -1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating +84 open in Japan
• DAX Futures: Indicating +16 open in Germany

Portfolio:

• Higher: On gains in my Medical, Retail and Tech 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 equity gains, rising Mideast tensions, emerging markets inflation worries and rising long-term rates. On the positive side, Food, Restaurant, Retail, HMO, Wireless, Telecom, Steel and Oil Tankers shares are especially strong, rising more than 1.0%. Cyclicals are outperforming. Copper is rising +.25%, oil is stable and the UBS-Bloomberg Ag Spot Index is falling -2.53%. The European Financial Sector CDS Index continues to trend lower, which is a major positive. The Citi US Economic Surprise Index is hitting the highest level since Feb. 9th, 2010. On the negative side, Homebuilding, I-Banking and Paper shares are under pressure, falling more than 1.0%. (XLF) is underperforming. Lumber is falling -1.11%. Gold is beginning to gain traction again, despite today's euro weakness. Moreover, Rice is breaking out technically despite overall weakness in ag commodities. The 10-Year yield is rising +7 bps to 3.54%. The Saudi sovereign cds is gaining +1.94% to 121.11 bps, the Belgium sovereign cds is rising +4.36% to 155.81 bps and the Italy sovereign cds is climbing +6.06% to 167.13 bps. The major averages continue to trade very well as they slowly build on their recent technical breakouts. Any subsiding in Mideast tensions would likely lead to another meaningful push higher in US stocks. I expect US stocks to trade modestly higher into the close from current levels on earnings optimism, technical buying, short-covering, stable energy prices and rising economic optimism.