Stocks Lower into Final Hour on Rising Eurozone Debt Worries, Emerging Markets Inflation Fears, Mideast Unrest, Rising Food/Energy Prices

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Slightly Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 16.68 +7.41%
  
• ISE Sentiment Index 89.0 -21.24%
  
• Total Put/Call 1.03 +5.1%
  
• NYSE Arms 1.20 -.04%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 90.0 +1.42%
  
• European Financial Sector CDS Index 99.25 +2.93%
  
• Western Europe Sovereign Debt CDS Index 186.50 +3.32%
  
• Emerging Market CDS Index 207.74 +1.67%
  
• 2-Year Swap Spread 19.0 unch.
  
• TED Spread 22.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .04% unch.
  
• Yield Curve 263.0 -1 bp
  
• China Import Iron Ore Spot $174.50/Metric Tonne -.46%
  
• Citi US Economic Surprise Index -49.10 -.1 point
  
• 10-Year TIPS Spread 2.29% -2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -57 open in Japan
• DAX Futures: Indicating -6 open in Germany

Portfolio:

• Slightly Lower: On losses in my Retail and Medical sector longs
  
• Disclosed Trades: Added (IWM)/(QQQ) hedges, added to my (EEM) short, added to my (SODA) long
  
• Market Exposure: Moved to 75% Net Long

BOTTOM LINE: Today's overall market action is just mildly bearish as the S&P 500 trades modestly lower despite rising eurozone debt worries, rising food/energy prices, emerging markets inflation fears, rising Mideast unrest and global growth concerns. On the positive side, Utility, Energy, Oil Service, Semi, Disk Drive, Computer Service, Biotech, Homebuilding and Food shares are higher on the day. Tech shares, in general, are outperforming. (XHB) has traded very well throughout the day. The euro looks like it is rolling over again at its 50-day moving average. Copper is rising +1.37%. The Saudi sovereign cds is falling -3.72% to 103.25 bps and the Japan sovereign cds is falling -1.3% to 82.82 bps. On the negative side, Education, Retail, REIT, Hospital, I-Banking, Bank, Steel and Alt Energy shares are under pressure, falling more than -1.0%. (XLF) has been heavy throughout the day. The US price for a gallon of gas is falling -.02/gallon today to $3.89/gallon. It is up .75/gallon in 93 days. The Spain sovereign cds is surging +7.17% to 259.88 bps, the Italy sovereign cds is gaining +4.06% to 158.87 bps, the UK sovereign cds is rising +3.7% to 59.17 bps, the Belgium sovereign cds is rising +3.83% to 146.42 bps and the US sovereign cds is rising +7.04% to 50.50 bps. Brazil's Bovespa and India's Sensex, which had been two of the world's worst performers, both had upside reversal's today. As well, the reversals higher in many commodities today are noteworthy given euro weakness and global growth worries. US stocks remain resilient despite a number of potential negative catalysts. However, the rising eurozone debt angst is a large negative. I added to one of my small long positions, (SODA), today. The stock has homerun potential over the longer-term, in my opinion. The fundamentals are strong, market opportunities are huge, valuation isn't too high, management is savvy and investor skepticism is high. The stock has a float of 8.8 million shares of which 3.36 million are sold short. I plan to build up my long position in this stock on any meaningful market-related decline in the shares from current levels. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bargain-hunting, buyout speculation and earnings optimism.