Stocks Slightly Lower into Final Hour on Profit-Taking, Rising Food Prices, Emerging Markets Inflation Fears, Mideast Unrest

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Mixed
  
• Volume: Light
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 15.75 +7.22%
  
• ISE Sentiment Index 109.0 unch.
  
• Total Put/Call .77 -21.43%
  
• NYSE Arms 1.08 +.33%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 93.43 +.41%
  
• European Financial Sector CDS Index 89.67 -.04%
  
• Western Europe Sovereign Debt CDS Index 189.41 unch.
  
• Emerging Market CDS Index 205.40 +1.18%
  
• 2-Year Swap Spread 18.0 unch.
  
• TED Spread 23.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .05% unch.
  
• Yield Curve 272.0 -1 bp
  
• China Import Iron Ore Spot $178.90/Metric Tonne unch.
  
• Citi US Economic Surprise Index 10.20 -1.4 points
  
• 10-Year TIPS Spread 2.59% -1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating -11 open in Japan
• DAX Futures: Indicating +18 open in Germany

Portfolio:

• Higher: On gains in my Medical, Retail and Tech 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 maintains recent gains, despite US/European debt fears, emerging markets inflation worries, rising food prices and Mideast unrest. On the positive side, Airline, Road & Rail, Gaming, REIT, Drug, Networking, Disk Drive and Internet shares are especially strong, rising more than .5%. The MS Tech Index continues to trade relatively well. Lumber is rising +.32%. The 10-Year Yield is falling -3 bps to 3.36%. The Japan sovereign cds is falling -2.87% to 77.08 bps. On the negative side, Coal and Oil Service shares are under pressure, falling more than .75%. The UBS-Bloomberg Ag Spot Index is rising +.87% and copper is falling -2.21%. The US price for a gallon of gas is rising .02/gallong today to $3.86/gallon. It is up .74/gallon in 69 days. The Greece, Ireland and Portugal sovereign cds are hovering near record highs. The US dollar continues to trade very poorly. The Shanghai Composite feel -1.51% last night, right to its 50-day moving average. Emerging markets inflation remains my number one concern. Trading still has a holiday feel to it. Today's activity appears to be another healthy consolidation of recent gains. The tech sector continues to trade much better with improving leadership and breadth. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less tech sector pessimism, earnings optimism, buyout speculation and technical buying.