Stocks Rising into Final Hour on Lower Energy Prices, Short-Covering, Fund Inflows

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Most Sectors Rising
  
• Volume: Below Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 18.85 -1.93%
  
• ISE Sentiment Index 129.0 -12.84%
  
• Total Put/Call .85 +4.94%
  
• NYSE Arms 1.26 +92.52%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 81.57 -1.57%
  
• European Financial Sector CDS Index 118.58 -3.63%
  
• Western Europe Sovereign Debt CDS Index 175.17 bps -.94%
  
• Emerging Market CDS Index 220.0 -2.32%
  
• 2-Year Swap Spread 19.0 +1 bp
  
• TED Spread 17.0 -2 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .13% +1 bp
  
• Yield Curve 273.0 +3 bps
  
• China Import Iron Ore Spot $182.80/Metric Tonne -.71%
  
• Citi US Economic Surprise Index +74.50 +4.3 points
  
• 10-Year TIPS Spread 2.40% -1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating +41 open in Japan
• DAX Futures: Indicating +6 open in Germany

Portfolio:

• Slightly Higher: On gains in my Technology, Medical and Retail longs
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades higher despite Mideast unrest, mixed economic data and emerging markets inflation fears. On the positive side, Road & Rail, Restaurant, REIT, Insurance, Hospital, Drug, Wireless, Telecom, Steel, Ag and Utility shares are especially strong, rising more than 1.0%. (IYR) has strongly outperformed throughout the day. Copper is rising +.85% and oil is falling -1.28%. The 10-year yield is stable at 3.41%. The US Muni CDS Index is falling -2.77% to 157.11 bps. The Spain sovereign cds is falling -5.64% to 249.66 bps and the Russia sovereign cds is falling -3.51% to 139.78 bps. The Israel sovereign cds is falling -1.93% to 171.10 bps, which is also a big positive. On the negative side, H0mebuilding, Disk Drive and Alt Energy shares are under pressure, falling more than 1.0%. Small-Caps are relatively weak today. Tech shares are also underperforming. "Value" stocks are outperforming "growth" shares. The UBS-Bloomberg Spot Ag Index is rising +.98%. The Saudi sovereign cds is rising +.4% to 136.51 bps. The US dollar is likely very close to a tradable rally. Sentiment regarding the currency is once again getting to bearish extremes. As well, the Citi US economic surprise index is at the highest level since Sept. 2008, while the Citi Eurozone economic surprise index continues to break down, falling to the lowest level since April 15th of last year. I continue to believe that as long as oil trades below $100/bbl. stocks can work their way higher. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, fund inflows, earnings optimism, lower energy prices, buyout speculation and declining euro sovereign debt angst.