Stocks Cutting Losses into Final Hour on Short-Covering, Euro Reversal, Bargain-Hunting

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Technology longs and Financial longs. I added to my (IWM)/(QQQQ) hedges this morning and them covered them, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are declining and volume is slightly above average. Investor angst is very high. Today's overall market action is mildly bearish. The VIX is rising +1.08% and is above average at 20.60. The ISE Sentiment Index is below average at 109.0 and the total put/call is slightly above average at 1.08. Finally, the NYSE Arms has been running high most of the day, hitting 2.33 at it intraday peak, and is currently 1.26. The Euro Financial Sector Credit Default Swap Index is rising +2.03% to 94.91 basis points. The North American Investment Grade CDS Index is rising +1.79% to 95.41 basis points. The TED Spread is unch. at 14.0 basis points. The 2-Year Swap Spread is rising +5.54% to 23.81 basis points. The Libor-OIS Spread is unch. at 9.0 basis points. The 10-Year TIPS Spread is down -4 basis points to 2.16%. The 3-Month T-Bill is yielding .11%, which is unch. today. Hospital, Bank and Computer shares are especially weak today, falling -1.5%+. The Western Europe Sovereign CDS Index is rising another +1.76%. The Greece sovereign cds is rising around +4.0%, which is a large negative. The AAII Bulls fell to 34.9%, while the % Bears fell to 29.53, which is also a negative. On the positive side, Coal, Gold, Steel, Road & Rail, Education, Retail and REIT shares are all higher on the day. (IYR) has traded relatively well throughout the day. Given the negative economic data again today out of Europe/US and another rise in Greece debt angst, I am very impressed with the market's resilience again today. A lot of bad news is currently being absorbed without much technical damage right here. There has also been some bad news on (AAPL) today, yet the stock has reversed 6 points from this morning's lows on heavy volume from just a split rumor and China plans, which should give the bears pause. Investors are closely watching the action in the euro as a gauge on the Greece debt situation, however today's reversal higher in the currency looks like a bought of short-covering that could prove fleeting. A more meaningful surge higher in the euro could spark a tradable rally in stocks. Longer-term, I still believe US dollar strength is a major positive for US equities. Nikkei futures indicate a -56 open in Japan and DAX futures indicate an up +39 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering, technical buying and bargain-hunting.