Stocks Rising into Final Hour on More Economic Optimism, Earnings Strength, Technical Buying, Stable Energy Prices

Broad Market Tone:

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

Equity Investor Angst:

• VIX 16.07 -1.29%
  
• ISE Sentiment Index 189.0 +243.64%
  
• Total Put/Call .85 +4.94%
  
• NYSE Arms .70 -3.94%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 79.56 -1.52%
  
• European Financial Sector CDS Index 134.58 bps -.46%
  
• Western Europe Sovereign Debt CDS Index 164.17 bps +.41%
  
• Emerging Market CDS Index 210.42 +.14%
  
• 2-Year Swap Spread 19.0 -1 bp
  
• TED Spread 17.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .14% unch.
  
• Yield Curve 288.0 unch.
  
• China Import Iron Ore Spot $185.70/Metric Tonne unch.
  
• Citi US Economic Surprise Index +63.40 +.2 point
  
• 10-Year TIPS Spread 2.36% +1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating +40 open in Japan
• DAX Futures: Indicating +2 open in Germany

Portfolio:

• Slightly Higher: On gains in my 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 higher, despite recent equity gains, Mideast tensions, emerging markets inflation worries and rising long-term rates. On the positive side, Hospital, HMO, Homebuilding, Retail, Restaurant, Gaming, Bank and Disk Drive shares are especially strong, rising more than 1.0%. (XLF) has traded well throughout the day, again. The Egypt sovereign cds is falling -1.56% to 339.62 bps and the Saudi sovereign cds is dropping -2.06% to 108.16 bps. Moreover, the US Muni CDS Index is falling -2.66% to 179.20 bps. The UBS-Bloomberg Spot Ag Index is down -.37%, Lumber is gaining +.64% and Copper is rising +.59%. Weekly retail sales rose +2.7% this week versus a +2.3% gain the prior week. On the negative side, Oil Service and Energy shares are under mild pressure, falling more than .75%. Gold is gaining +1.2%. The Spain sovereign cds is up +1.69% to 234.54 bps, the Portugal sovereign cds is rising +1.38% to 424.76 bps and the Greece sovereign cds is gaining +2.92% to 841.44 bps. The Citi Eurozone Economic Surprise Index appears to be rolling over, falling another -16.85% to +38.0. The major US averages continue to trade very well as they slowly build on their recent technical breakouts. However, volume and breadth are lacking on this last push higher. I expect US stocks to trade modestly higher into the close from current levels on earnings optimism, technical buying, US fund inflows, buyout speculation, short-covering, stable energy prices and rising economic optimism.