Stocks Falling into Final Hour on Global Growth Worries, Eurozone Debt Concerns, Emerging Market Inflation Fears, More Shorting

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  
• Sector Performance: Almost Every Sector Declining
  
• Volume: Above Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 17.26 +8.55%
  
• ISE Sentiment Index 74.0 -37.82%
  
• Total Put/Call .95 +20.25%
  
• NYSE Arms 1.80 +62.49%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 88.44 -.61%
  
• European Financial Sector CDS Index 92.17 +2.65%
  
• Western Europe Sovereign Debt CDS Index 187.92 -.62%
  
• Emerging Market CDS Index 206.46 +.86%
  
• 2-Year Swap Spread 18.0 unch.
  
• TED Spread 24.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .02% -1 bp
  
• Yield Curve 261.0 unch.
  
• China Import Iron Ore Spot $179.60/Metric Tonne -.06%
  
• Citi US Economic Surprise Index -35.30 -2.7 points
  
• 10-Year TIPS Spread 2.44% -5 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -110 open in Japan
• DAX Futures: Indicating -31 open in Germany

Portfolio:

• Lower: On losses in my Biotech, Medical and Tech sector longs
  
• Disclosed Trades: Added (IWM)/(QQQ) hedges, added to my (EEM) short
  
• Market Exposure: Moved to 50% Net Long

BOTTOM LINE: Today's overall market action is very bearish as the S&P 500 trades near session lows on above average volume despite falling food/energy prices, a strong US dollar and falling long-term rates. On the positive side, Airline, Retail, HMO and Gaming shares are rising on the day. The US sovereign cds is falling -4.19% to 41.18 bps. Oil is falling -4.4%, gold is down -.71% and the UBS-Bloomberg Ag Spot Index is down -2.4%. The 10-year TIPS spread is technically weak and close to a breakdown. The 10-year yield is falling -5 bps to 3.16%. On the negative side, Road & Rail, Homebuilding, Disk Drive, Steel, Ag, Oil Service, Energy, Oil Tanker, Alt Energy and Coal shares are under significant pressure, falling more than -2.0%. The US price for a gallon of gas is rising +.01/gallon today to $3.96/gallon. It is up .84/gallon in 85 days. Copper is falling -3.32% and lumber is falling -1.87%. Copper is breaking down below its 200-day moving average for the first time in months. Lumber has collapsed about -30.0% in six weeks. The Shanghai Composite finished at session lows overnight, falling -.25%, despite strength in the rest of Asia. Moreover, Brazil's Bovespa continues to trade very poorly, falling another -1.7% today and is now down -8.0% for the year. Given how many large funds are heavily weighted in commodity-related securities, and remained bullish even after recent sharp losses, I suspect some high-profile casualties may occur over the coming weeks. I expect US stocks to trade mixed-to-lower into the close from current levels on technical selling, more shorting, eurozone debt worries, rising Mideast unrest, global growth concerns, emerging market inflation fears and profit-taking.