Stocks Lower into Final Hour on Profit-Taking, Rising Gas Prices, US Dollar Weakness, Technical Selling

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Mixed
  
• Volume: Slightly Above Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 15.79 +7.12%
  
• ISE Sentiment Index 110.0 +44.7%
  
• Total Put/Call .81 -11.97%
  
• NYSE Arms 1.04 -17.97%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 87.57 -1.11%
  
• European Financial Sector CDS Index 84.85 -.19%
  
• Western Europe Sovereign Debt CDS Index 187.16 -.05%
  
• Emerging Market CDS Index 197.88 -1.08%
  
• 2-Year Swap Spread 17.0 unch.
  
• TED Spread 24.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .03% -1 bp
  
• Yield Curve 267.0 -1 bp
  
• China Import Iron Ore Spot $181.50/Metric Tonne n/a
  
• Citi US Economic Surprise Index -4.20 -5.2 points
  
• 10-Year TIPS Spread 2.56% -1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating -24 open in Japan
• DAX Futures: Indicating +10 open in Germany

Portfolio:

• Slightly Higher: On gains in my Medical, Retail and Biotech sector longs
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades slightly lower, despite the Bin Laden news and gains in overseas stocks. On the positive side, Computer Service, Medical Equipment, Biotech, Drug, HMO and Education shares are especially strong, rising more than +.50%. Copper is rising +.34%. The US Muni CDS Index is falling -9.6% to 122.55 bps, the Israeli sovereign cds is falling -4.93% to 128.50 bps and the Saudi sovereign cds is declining -8.49% to 101.81 bps. On the negative side, Homebuilding, Networking, Disk Drive, Steel, Oil Service, Energy and Alt Energy shares are under pressure, falling more than -1.0%. Small-caps are underperforming. Commodity-related equities have traded heavy throughout the day despite more US dollar weakness. The US price for a gallon of gas is rising .04/gallon today to $3.95/gallon. It is up .83/gallon in 76 days. Oil is just -.38% lower and lumber is falling -1.1%. Rice futures are rising another +1.77% after Friday's technical breakout. The US dollar continues to trade very poorly. The "sell in May" psychology, worries over the US debt ceiling debate, the ongoing surge in gasoline prices, recent stock gains and extreme US dollar weakness are likely resulting in some mild profit-taking today. I suspect stocks will trade better later this week. I expect US stocks to trade mixed-to-lower into the close from current levels on profit taking, more shorting, technical selling, emerging markets inflation fears.