Stocks Slightly Lower into Final Hour on Rising Energy Prices, Eurozone Debt Angst, Mideast Unrest, Japan Worries

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 20.16 -2.18%
  
• ISE Sentiment Index 128.0 -1.54%
  
• Total Put/Call .78 +4.0%
  
• NYSE Arms 1.38 -13.76%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 96.51 +.77%
  
• European Financial Sector CDS Index 103.97 +2.40%
  
• Western Europe Sovereign Debt CDS Index 168.08 bps +2.13%
  
• Emerging Market CDS Index 213.70 -3.50%
  
• 2-Year Swap Spread 20.0 unch.
  
• TED Spread 22.0 -2 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .09% +2 bps
  
• Yield Curve 268.0 -1 bp
  
• China Import Iron Ore Spot $164.40/Metric Tonne +.37%
  
• Citi US Economic Surprise Index +61.0 -.6 point
  
• 10-Year TIPS Spread 2.39% -6 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -108 open in Japan
• DAX Futures: Indicating +20 open in Germany

Portfolio:

• Slightly Higher: On gains in my Biotech/Medical longs and ETF hedges
  
• Disclosed Trades: None
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades just slightly lower, despite rising energy prices, growing Mideast unrest, Japan concerns and rising eurozone debt angst. On the positive side, Education, Drug, Telecom, Computer Serivice, Steel, Oil Tanker, Coal and Utility shares are higher on the day. Copper is gaining +.62%. The Japan sovereign cds is falling another -7.07% to 98.92 bps, which is a major positive. On the negative side, Airline, Road & Rail, Gaming, Retail, REIT, Networking, Disk Drive and Semi shares are under meaningful pressure, falling more than 1.0%. Small-caps and cyclicals are relatively weak. (IYR) has underperformed throughout the day. Tech is also underperforming again. Oil is rising +2.02% and lumber is falling -3.09%. The avg. US price for a gallon of gas is unch. today at $3.55/gallon. It is up .43/gallon in 35 days. The Portugal sovereign cds is climbing +2.63% to 531.55 bps, the Greece sovereign cds is surging +3.3% to 993.43 bps and the Ireland sovereign cds is gaining +5.11% to 616.17 bps. The Citi Eurozone Economic Surprise Index is falling again to -12.80 today and is now at the lowest since March 23rd of last year. The Portugal and Ireland credit default swaps are very close to breaking out technically. The US dollar continues to trade poorly, however I suspect a reversal higher is in the offing over the coming days. The Networking subsector of tech, which had been a market leader, remains heavy. The market's resilience in the face of numerous mounting headwinds remains very impressive. The S&P 500 is still right near its 50-day moving average. If the benchmark can break convincingly above this level I will further add market exposure. I expect US stocks to trade mixed-to-lower into the close from current levels on growing Mideast unrest, rising energy prices, rising eurozone debt angst, Japan concerns, more shorting, profit-taking and technical selling.