Stocks Surging into Final Hour on Euro Bounce, Asian Equity Strength, Short-Covering, Technical Buying

Broad Market Tone:

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

Equity Investor Angst:

• VIX 16.02 +.25%
  
• ISE Sentiment Index 80.0 -21.57%
  
• Total Put/Call .78 +9.86%
  
• NYSE Arms 1.13 +36.78%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 89.88 -1.01%
  
• European Financial Sector CDS Index 113.30 -2.87%
  
• Western Europe Sovereign Debt CDS Index 194.87 -1.87%
  
• Emerging Market CDS Index 213.05 -2.42%
  
• 2-Year Swap Spread 19.0 +1 bp
  
• TED Spread 21.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .05% unch.
  
• Yield Curve 258.0 -1 bp
  
• China Import Iron Ore Spot $169.80/Metric Tonne -.67%
  
• Citi US Economic Surprise Index -71.40 -11.6 points
  
• 10-Year TIPS Spread 2.24% -3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -8 open in Japan
• DAX Futures: Indicating +6 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 above its 50-day moving average despite eurozone debt angst, rising energy prices, global growth concerns and emerging market inflation fears. On the positive side, Alt Energy, Paper, REIT, Homebuilding, Drug, Disk Drive, Semi, Ag and Oil Tanker shares are especially strong, rising more than +1.0%. Small-cap shares are outperforming again. (IYR) is relatively strong. Lumber is rising +3.06% and the UBS-Bloomberg Ag Spot Index is falling -.32%. On the negative side, Wireless and Restaurant shares are down on the day. Oil is surging +2.0% and copper is falling -.2%. The US price for a gallon of gas is -.03/gallon today to $3.78/gallon. It is up .64/gallon in less than 4 months. The 10-year yield is still falling too much too quickly, declining another -3 bps to 3.04%. The Japan sovereign cds is climbing +1.12% to 86.35 bps and key eurozone cds are not falling back much, notwithstanding the jump in the euro currency, equity gains and rising optimism for another Greek bailout. The Citi Latin America Economic Surprise Index fell -7.4 points today to -22.20, which is the lowest reading since mid-February. The major US averages remain very resilient in the face of mounting headwinds. Equity investors continue to cheer any signs of a pushing out of the dealing with the eurozone debt situation. I continue to believe that it is highly unlikely the eurozone will exist in its current form a few years from now. Asian equities traded very well overnight and could help boost US stocks further in the near-term. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bargain-hunting, technical buying, end-of-month window dressing, a bounce in the euro and lower food prices.