Stocks Slightly Higher into Final Hour on Lower Long-Term Rates, Short-Covering, Less Economic Fear

Broad Market Tone:

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

Equity Investor Angst:

• VIX 16.10 -5.41%
  
• ISE Sentiment Index 172.0 +24.64%
  
• Total Put/Call .80 unch.
  
• NYSE Arms .72 +14.31%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 84.64 bps +1.35%
  
• European Financial Sector CDS Index 76.84 bps +6.80%
  
• Western Europe Sovereign Debt CDS Index 83.50 bps +5.92%
  
• Emerging Market CDS Index 213.68 bps +.52%
  
• 2-Year Swap Spread 14.0 bps -2 basis points
  
• TED Spread 13.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .16% unch.
  
• Yield Curve 283.0 bps +1 bp
  
• China Import Iron Ore Spot $160.50/Metric Tonne +2.69%
  
• Citi US Economic Surprise Index +41.80 +1.7 points
  
• 10-Year TIPS Spread 2.33% +3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +88 open in Japan
• DAX Futures: Indicating +15 open in Germany

Portfolio:

• Higher: On gains in my Retail, Financial, Biotech and Tech long positions
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish as stocks trade near session highs, despite rising sovereign debt fear. On the positive side, Education, REIT, Bank, Coal, Disk Drive and Networking stocks are especially strong, rising 1.0%+. Small-caps are outperforming again. (XLF) and (IYR) have traded very well throughout the day. Weekly retail sales rose +3.9% this week versus a +3.6% gain the prior week and up from a +1.8% increase during the last week of February. This is also the best weekly retail sales showing since the week of April 10th, 2007, which is a large positive. The euro continues to trade poorly even on more dovish-than-expected FOMC minutes, which likely means a test of recent lows is coming very soon. On the negative side, Homebuilding and Agriculture shares are .50%+ lower on the day. The rise in most euro cds is a large negative. The Citi Latin American Economic Surprise Index has fallen to +.4, which is the lowest of any region. Shanghai Copper inventories are up another +9.66% today and have risen 19.3% over the last five days to another record high. Investor angst remains subdued, which is also a negative. One of my longs, (DISCA), is hitting another new all-time high today. I still see meaningful upside in the shares from current levels over the intermediate-term. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower long-term rates, investment manager performance angst, technical buying and less economic fear.