Stocks Rising into Final Hour on Falling Food/Energy Prices, Short-Covering, Less Financial Sector Pessimism, Technical Buying

Broad Market Tone:

• Advance/Decline Line: Slightly Higher
  
• Sector Performance: Mixed
  
• Volume: Around Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 14.63 -4.69%
  
• ISE Sentiment Index n/a
  
• Total Put/Call .80 -9.09%
  
• NYSE Arms .99 +24.04%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 90.50 -1.90%
  
• European Financial Sector CDS Index 84.75 -3.65%
  
• Western Europe Sovereign Debt CDS Index 189.25 -2.41%
  
• Emerging Market CDS Index 204.22 -1.23%
  
• 2-Year Swap Spread 16.0 +1 bp
  
• TED Spread 24.0 +2 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .04% -1 bp
  
• Yield Curve 269.0 -1 bp
  
• China Import Iron Ore Spot $181.50/Metric Tonne +1.11%
  
• Citi US Economic Surprise Index 3.50 -8.2 points
  
• 10-Year TIPS Spread 2.56% unch.
  

Overseas Futures:

• Nikkei Futures: Indicating +91 open in Japan
• DAX Futures: Indicating +22 open in Germany

Portfolio:

• Slightly Higher: On gains in my Medical and Biotech sector 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 slightly higher, despite some disappointing economic data, tech sector weakness, emerging markets inflation worries and Mideast unrest. On the positive side, Road & Rail, REIT, Bank, Insurance, HMO, Medical, Wireless, Software, Coal and Utility shares are especially strong, rising more than +.75%. Cyclical shares are outperforming again as the Transports surge to another new record. (IYR)/(XLF) have traded well throughout the day. The UBS-Bloomberg Spot Ag Index is falling another -2.06%, oil is declining -.47%, lumber is jumping +3.6% and copper is rising +.4%. The Spain sovereign cds is falling -6.16%, the Italy sovereign cds is declining -3.41%, the Greece sovereign cds is falling -3.22% and the Belgium sovereign cds is falling -3.9% to 146.17 bps. 10 10-year yield is falling -4 bps to 3.31%. The large decline in the Spain sovereign cds is a big positive. The AAII % Bulls rose to 37.9% this week, while the % Bears fell to 30.65. On the negative side, Education, Homebuilding, Networking, Semi, Steel, Ag and Oil Tanker shares are under pressure, falling more than -.75%. The US price for a gallon of gas is rising .01/gallon today to $3.89/gallon. It is up .77/gallon in 72 days. The US dollar continues to trade very poorly. The Shanghai Composite fell another -1.3% last night, finishing at session lows, and continues to trade very poorly given the ongoing rally in global equities. Brazil shares are also weak again today with the Bovespa dropping another -1.16%. The broad US stock market continues to trade very well. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less real estate/financial sector pessimism, earnings optimism, buyout speculation, investor performance angst, falling food/energy prices, lower long-term rates, less fed uncertainty and technical buying.