Stocks Surging into Final Hour on Less Tech Sector Pessimism, Technical Buying, Short-Covering, More Economic Optimism

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: About Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 15.17 -4.17%
  
• ISE Sentiment Index 122.0 -3.17%
  
• Total Put/Call .98 +8.89%
  
• NYSE Arms 1.19 +36.51%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 92.99 -2.35%
  
• European Financial Sector CDS Index 87.17 -.50%
  
• Western Europe Sovereign Debt CDS Index 182.08 bps +.18%
  
• Emerging Market CDS Index 204.56 -.47%
  
• 2-Year Swap Spread 17.0 unch.
  
• TED Spread 22.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .05% unch.
  
• Yield Curve 274.0 +4 bps
  
• China Import Iron Ore Spot $178.50/Metric Tonne -.17%
  
• Citi US Economic Surprise Index +19.80 -.1 point
  
• 10-Year TIPS Spread 2.62% -1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating +79 open in Japan
• DAX Futures: Indicating +14 open in Germany

Portfolio:

• Slightly Higher: On gains in my Biotech, Retail and Tech sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges, covered some of my (EEM) short, added to my (ISRG) long, took profits in another long
  
• Market Exposure: Moved to 100% Net Long

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades near session highs, back above its 50-day moving average, despite US/European debt fears, emerging markets inflation worries, rising food/energy prices, Mideast unrest, Financial sector earnings jitters and Japan concerns. On the positive side, Networking, Disk Drive, Semi, Computer, Software, Internet, Steel, Energy, Coal, Defense and Wireless shares are especially strong, rising more than 2.0%. Cyclicals and Small-caps are outperforming. The MS Tech Index is surging back to slightly above its 50-day moving average. Copper is rising +2.51%. The Japan sovereign cds is falling -3.5% to 83.20 bps and the US sovereign cds is falling -4.19% to 45.75 bps. On the negative side, Education, Road & Rail and Bank shares are under mild pressure, falling more than .5%. Oil is rising +3.06%, the UBS-Bloomberg Ag Spot Index is rising +.63% and lumber is declining -3.64%. The US price for a gallon of gas is unch. today at $3.84/gallon. It is up .72/gallon in 64 days. The Portugal sovereign cds is rising +4.23% to 635.32 bps, the Ireland sovereign cds is climbing +4.41% to 622.54 bps and the Greece sovereign cds is gaining +2.24% to 1,331.39 bps. The Greece and Portugal sovereign cds are making new record highs. The Ireland sovereign cds is now approaching its record. The Shanghai Composite rose only +.27% night with the Shanghai Property Index dropping -1.54%. The quality of today's rally is improved as breadth, volume and leadership are better. Investor complacency remains fairly elevated. It is also a bit of a worry to see the lack of participation by financials and transports. The US dollar continues to trade very poorly given the rise in sovereign cds is the eurozone peripherals. One of my longs, (AAPL), reports after the close. I suspect they will easily exceed estimates, but give very conservative guidance on supply chain issues. I plan to add to my long position on any meaningful decline in the share price from current levels related to these issues. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less tech sector pessimism, technical buying and more economic optimism.