Stocks Rising into Final Hour on Short-Covering, Less Eurozone Debt Angst, Japan Equity Rally, Bargain-Hunting

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Almost Every Sector Rising
  
• Volume: Slightly Below Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 26.78 -9.05%
  
• ISE Sentiment Index 129.0 +67.53%
  
• Total Put/Call 1.09 -6.84%
  
• NYSE Arms .66 -78.45%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 89.53 -.96%
  
• European Financial Sector CDS Index 110.21 -4.51%
  
• Western Europe Sovereign Debt CDS Index 170.0 bps -2.49%
  
• Emerging Market CDS Index 222.20 -.76%
  
• 2-Year Swap Spread 21.0 +1 bp
  
• TED Spread 23.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .07% -2 bps
  
• Yield Curve 265.0 +1 bp
  
• China Import Iron Ore Spot $163.90/Metric Tonne +.18%
  
• Citi US Economic Surprise Index +63.80 +3.6 points
  
• 10-Year TIPS Spread 2.44% +6 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -122 open in Japan
• DAX Futures: Indicating -16 open in Germany

Portfolio:

• Slightly Higher: On gains in my Tech and Medical longs
  
• Disclosed Trades: Covered some of my (IWM)/(QQQQ) hedges and some of my (EEM) short
  
• Market Exposure: Moved to 75% Net Long

BOTTOM LINE: Today's overall market action is just mildly bullish as the S&P 500 gives up some opening gains, despite a bounce in Japanese equities, strong gains in Europe, mostly positive economic data and recent stock losses. On the positive side, Road & Rail, Wireless, Oil Service, Energy and Coal shares are especially strong, rising more than 2.0%. Cyclicals are outperforming. Copper is jumping +3.7% and Lumber is surging +3.07%. The Belgium sovereign cds is falling -3.49% to 142.67 bps and the Japan sovereign cds is falling -4.22% to 108.41 bps. Moreover, the US Muni CDS Index is falling -2.26% to 150.25 bps. The AAII % Bulls fell to 28.49, while the % Bears surged to 40.12, which is also a positive. On the negative side, Airline, Education, Restaurant, Retail, Hospital, Disk Drive, Internet and Oil Tanker shares are down on the day. (IYR) is relatively weak. Tech shares also continue to underperform. Singapore Electronics Exports fell -12.8% y-o-y in February, which was the worst showing since October 2009. China Iron Ore Spot has declined -14.2% in about 1 month. Oil is jumping +3.1% and gold is rising +.54%. The Israeli sovereign cds is rising +1.92% to 154.79 bps. The avg. US price for a gallon of gas is unch. today at $3.55/gallon. It is up .43/gallon in 30 days. Action in the tech sector is worrisome, notwithstanding today's bounce. News that the Fed will approve some bank dividend hikes on Friday is boosting (XLF) this afternoon. As well, (EWJ) is firming after a mid-day swoon. I still suspect that global growth is slowing more than economists perceive right now and that this is not factored into most stocks. As well, one more large surge in oil will likely once again result in equity market weakness. Breadth and volume are unimpressive on today's rally. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bank sector strength, bargain-hunting and less eurozone debt angst.