Stocks Falling into Final Hour on Global Growth Worries, Emerging Markets Inflation Fears, Mideast Unrest, 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 17.63 -2.54%
  
• ISE Sentiment Index 56.0 +15.24%
  
• Total Put/Call 1.19 +12.26%
  
• NYSE Arms 1.14 +3.19%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 94.41 +1.41%
  
• European Financial Sector CDS Index 107.67 -4.17%
  
• Western Europe Sovereign Debt CDS Index 190.58 -3.05%
  
• Emerging Market CDS Index 220.18 +1.26%
  
• 2-Year Swap Spread 20.0 unch.
  
• TED Spread 22.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .03% -1 bp
  
• Yield Curve 256.0 -1 bp
  
• China Import Iron Ore Spot $170.20/Metric Tonne +.83%
  
• Citi US Economic Surprise Index -117.2 -26.3 points
  
• 10-Year TIPS Spread 2.23% -2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -32 open in Japan
• DAX Futures: Indicating +7 open in Germany

Portfolio:

• Slightly Lower: On losses in my Tech, Retail, Medical and Biotech sector longs
  
• Disclosed Trades: Added to my (IWM), (QQQ) hedges and added to my (EEM) short
  
• Market Exposure: Moved to 50% Net Long

BOTTOM LINE: Today's overall market action is very bearish as the S&P 500 trades near session lows around support at 1,300 despite falling eurozone debt angst, a bounce in the euro and strength in some overseas indices. On the positive side, Oil Service, REIT and Homebuilding shares are higher on the day. Copper is rising +.92%. The Spain sovereign cds is falling -6.7% to 237.17 bps, the Italy sovereign cds is declining -8.52% to 145.17 bps, the Belgium sovereign cds is down -8.78% to 131.66 bps, the Ireland sovereign cds is falling -4.2% to 643.5 bps and the Greece sovereign cds is down -5.3% to 1,374.60 bps. On the negative side, Road & Rail, Gaming, Hospital, Semi, Internet, Paper and Oil Tanker shares are under significant pressure, falling more than -1.5%. Small-cap and cyclical stocks are underperforming. Tech and transport shares have also been heavy throughout the day. Oil is down just -.05%, the UBS-Bloomberg Ag Spot Index is rising +.2% and lumber is falling -1.6%. The US price for a gallon of gas is up +.01/gallon today to $3.79/gallon. It is up .65/gallon in less than 4 months. The China sovereign cds is gaining +5.2% to 76.83 bps, the Asia Pacific Sovereign CDS Index is rising +1.39% to 109.25 bps and the Illinois Muni cds is jumping +4.35% to 172.0 bps. The Citi US Economic Surprise Index has plunged -214.7 points since March 4th. From Aug. 15th 2007 to March 26th 2008, when economic data began to turn down during the last recession, this index dropped -183.1 points. While Europe has once again kicked the can down the road, investors appear to be focusing more on the intensifying drive for austerity. If 1,300 fails to hold early next week, another push lower is likely. The fact that food & energy are maintaining recent gains today with equity weakness on poor economic data is a large negative. Those expecting emerging markets to give up their monetary tightening stances anytime soon are likely mistaken, in my opinion. I expect US stocks to trade mixed-to-lower into the close from current levels on global growth worries, eurozone debt concerns, emerging markets inflation fears, rising food prices, rising Mideast, unrest, technical selling and more shorting.