Stocks Higher into Final Hour on Euro Bounce, Tech Sector Strength, Short-Covering, Bargain-Hunting

Broad Market Tone:

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

Equity Investor Angst:

• VIX 15.99 -6.44%
  
• ISE Sentiment Index 122.0 +2.52%
  
• Total Put/Call .97 +34.72%
  
• NYSE Arms .75 -42.38%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 91.11 +.12%
  
• European Financial Sector CDS Index 122.59 -.62%
  
• Western Europe Sovereign Debt CDS Index 196.92 +.04%
  
• Emerging Market CDS Index 219.65 +3.42%
  
• 2-Year Swap Spread 18.0 unch.
  
• TED Spread 21.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .05% unch.
  
• Yield Curve 257.0 -2 bps
  
• China Import Iron Ore Spot $171.30/Metric Tonne -.98%
  
• Citi US Economic Surprise Index -57.90 -9.0 points
  
• 10-Year TIPS Spread 2.29% -3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -2 open in Japan
• DAX Futures: Indicating +65 open in Germany

Portfolio:

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

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades back to its 50-day moving average despite eurozone debt angst, rising food prices, global growth concerns and emerging market inflation fears. On the positive side, Coal, Software, Computer, Disk Drive, HMO, Homebuilding and REIT shares are especially strong, rising more than +1.5%. Small-cap shares are outperforming. (IYR) is relatively strong. Tech stocks have also traded well throughout the day. Lumber is gaining +4.32% and oil is falling -1.1%. The US Muni CDS Index is falling -2.8% to 120.31 bps. The AAII % Bulls fell to 25.61 this week, while the % Bears rose to 41.42, which is also a positive. On the negative side, Oil Tanker, Defense, Utility, Computer Service and Airline shares are down on the day. The UBS-Bloomberg Ag Spot Index is rising +.64%. The US price for a gallon of gas is unch. today at $3.81/gallon. It is up .67/gallon in 99 days. The 10-year yield is starting to fall too much too quickly, declining another -7 bps to 3.06%. The Russia sovereign cds is gaining +2.13% to 143.15 bps, the Brazil sovereign cds is rising 2.62% to 107.75 and the Portugal sovereign cds is gaining +1.46% to 678.13 bps. The +36% rise in the Eurozone Financial Sector CDS Index over the last 9 days is also a large negative. Moreover, the Shanghai Composite continues to trade poorly, falling another -.2% last night and finishing near session lows, as the rest of Asia saw strong gains. The Citi Latin America Economic Surprise Index fell to -12.6 today, which is the lowest reading since February. The major US averages remain very resilient in the face of mounting headwinds. However, I suspect equity weakness will reappear later next week. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bargain-hunting, a bounce in the euro, tech sector strength and lower energy prices.