Stocks Slightly Lower into Final Hour on Global Growth Worries, Rising Eurozone Debt Angst, Emerging Market Inflation Fears, Growing Mideast Unrest

Broad Market Tone:

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

Equity Investor Angst:

• VIX 17.61 -3.45%
  
• ISE Sentiment Index 112.0 +19.15%
  
• Total Put/Call 1.12 +19.15%
  
• NYSE Arms .80 -15.45%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 90.47 +1.92%
  
• European Financial Sector CDS Index 106.43 +15.16%
  
• Western Europe Sovereign Debt CDS Index 176.42 +.09%
  
• Emerging Market CDS Index 206.70 +.26%
  
• 2-Year Swap Spread 18.0 -1 bp
  
• TED Spread 23.0 -1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .03% +1 bp
  
• Yield Curve 260.0 -3 bps
  
• China Import Iron Ore Spot $178.10/Metric Tonne -.22%
  
• Citi US Economic Surprise Index -43.80 -5.5 points
  
• 10-Year TIPS Spread 2.30% -5 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +33 open in Japan
• DAX Futures: Indicating +35 open in Germany

Portfolio:

• Slightly Higher: On gains in my Biotech, Retail & Tech sector longs, Index Hedges and Emerging Market Shorts
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added back (IWM), (QQQ) hedges
  
• Market Exposure: Moved to 75% Net Long

BOTTOM LINE: Today's overall market action is just mildly bearish as the S&P 500 trades near session highs despite rising eurozone debt angst, eurozone equity weakness, growing Mideast unrest, emerging market inflation fears, global growth concerns and rising food prices. On the positive side, Steel, Coal, Utility, Computer Service, Bank and Airline shares are especially strong, rising more than +.5%. (XLF) has outperformed throughout the day again. Gold is down -.68% and copper is gaining +.93%. The 10-year TIPS spread continues to weaken. The 10-year yield is falling -3 bps to 3.12%. Weekly retail sales rose +4.3% last week versus a +4.7% gain the prior week. On the negative side, Road & Rail, Education, Construction, HMO, Networking, Disk Drive, Semi, Computer, Oil Service, Oil Tanker and Alt Energy shares are under pressure, falling more than -1.0%. Cyclical stocks are badly underperforming with the MS Cyclical Index dropping -1.72%. The US price for a gallon of gas is falling -.02/gallon today to $3.94/gallon. It is up .80/gallon in 90 days. The UBS-Bloomberg Ag Spot Index is rising +1.39% and Lumber is dropping -4.31%. Lumber has collapsed about -35% in less than 2 months. The Spain sovereign cds is climbing +4.3% to 235.05 bps, the Portugal sovereign cds is climbing +1.8% to 604.91 bps, the Greece sovereign cds is gaining +3.2% to 1,270.64 bps, the Ireland sovereign cds is rising +1.9% to 612.66 bps and the Belgium sovereign cds is gaining 5.68% to 134.33 bps. The huge gain in the Eurozone Financial Sector CDS Index is a large negative. Commodities, in general, continue to trade as if further downside is in store. India's Sensex continues to trade very poorly and fell another -1.13% overnight, which leaves it down -11.56% ytd. Investor complacency remains fairly high given the developing headwinds. Market-leaders are trading better today. The S&P 500 found support right below its 50-day moving average this morning. Some more near-term equity strength is possible, but a solid bottom from the recent pullback is likely further out. I expect US stocks to trade mixed-to-higher into the close from current levels on less financial sector pessimism, short-covering, bargain-hunting and technical buying.