Stocks Lower into Final Hour on Rising Eurozone Debt Angst, Global Growth Worries, Emerging Markets Inflation Fears, Technical Selling

Broad Market Tone:

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

Equity Investor Angst:

• VIX 17.56 +.75%
  
• ISE Sentiment Index 90.0 +4.65%
  
• Total Put/Call 1.13 +9.71%
  
• NYSE Arms 1.65 +12.36%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 91.25 +1.39%
  
• European Financial Sector CDS Index 113.83 +13.56%
  
• Western Europe Sovereign Debt CDS Index 194.83 +4.47%
  
• Emerging Market CDS Index 211.09 +2.23%
  
• 2-Year Swap Spread 20.0 +1 bp
  
• TED Spread 21.0 -1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .05% +1 bp
  
• Yield Curve 261.0 -2 bps
  
• China Import Iron Ore Spot $174.50/Metric Tonne unch.
  
• Citi US Economic Surprise Index -49.80 -.7 point
  
• 10-Year TIPS Spread 2.28% -1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating -30 open in Japan
• DAX Futures: Indicating +19 open in Germany

Portfolio:

• Slightly Lower: On losses in my Tech, Biotech and Medical sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and then added them back
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is bearish as the S&P 500 breaks back below its 50-day moving average on rising eurozone debt angst, global growth worries, emerging markets inflation concerns, more shorting and technical selling. On the positive side, Restaurant, Retail and Ag shares are holding up well. The euro currency continues to trade poorly. The US sovereign cds is falling -2.94% to 49.01 bps. Oil is falling -2.5% and the UBS-Bloomberg Ag Spot Index is falling -.77%. On the negative side, Coal, Alt Energy, Oil Service, Paper, Software, Networking, Medical, HMO, Construction, Gaming and Education shares are under meaningful pressure, falling more than -1.75%. Small-caps and cyclicals are underperforming. Copper is dropping -3.54% and Lumber is falling -3.6%. The US price for a gallon of gas is falling -.05/gallon today to $3.84/gallon. It is up .70/gallon in 96 days. The Spain sovereign cds is surging +5.05% to 273.11 bps, the Italy sovereign cds is gaining +6.87% to 169.83 bps, the UK sovereign cds is rising +3.95% to 61.47 bps, the Belgium sovereign cds is rising +6.79% to 157.50 bps, the Russia sovereign cds is jumping +6.38% to 144.0 bps, the China sovereign cds is rising +3.75% to 72.74 bps, the Greece sovereign cds is gaining +4.86% to 1,410.64 bps, the Portugal sovereign cds is rising +3.68% to 662.17 bps and the Saudi sovereign cds is rising +3.79% to 107.16 bps. Moreover, the US Muni CDS Index is rising +4.63% to 127.88 bps. Germany's DAX gapped below its 50-day moving average and closed near its lows for the day. The Shanghai composite is now down -1.2% ytd after falling almost -3.0% overnight. China's 7-day repo rate is surging +82 bps today to 4.71%, which is the highest level since February. India's Sensex is now down -12.3% ytd after dropping another -1.82% overnight. As well, the Vietnam Stock Index has plunged about -14% in 14 days and is down about -21.0% from its February high. The +25% rise in the Eurozone Financial Sector CDS Index is also a large negative. Gauges of investor angst are moving higher, which is a positive, however recent declines lack volume and feel a bit too orderly. Until eurozone debt angst subsides meaningfully the major averages will likely continue to trend lower. If the Spain cds begins to gain meaningful upside traction and nears its January high of around 340 bps a more disorderly decline in global stocks is likely. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bargain-hunting, lower food/energy prices and earnings optimism.