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

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 15.37 -4.77%
  
• ISE Sentiment Index 167.0 +27.48%
  
• Total Put/Call .66 -4.35%
  
• NYSE Arms .58 +29.34%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 84.98 bps -.87%
  
• European Financial Sector CDS Index 75.18 bps -5.45%
  
• Western Europe Sovereign Debt CDS Index 79.0 bps -5.48%
  
• Emerging Market CDS Index 216.03 bps -.54%
  
• 2-Year Swap Spread 14.0 bps unch.
  
• TED Spread 17.0 +2 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .13% - 2bps
  
• Yield Curve 280.0 bps -2 bps
  
• China Import Iron Ore Spot $167.40/Metric Tonne +.72%
  
• Citi US Economic Surprise Index +43.10 +.9 point
  
• 10-Year TIPS Spread 2.34% unch.
  

Overseas Futures:

• Nikkei Futures: Indicating +48 open in Japan
• DAX Futures: Indicating +16 open in Germany

Portfolio:

• Higher: On gains in my Financial, Medical 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 on declining sovereign debt angst, stable energy prices and falling long-term rates. On the positive side, Airline, Bank, Networking, Semi, Computer Hardware, Coal and Defense stocks are especially strong, rising +1.0%+. (XLF) has traded well throughout the day. CDS indices are down across the board again, which is a large positive. Moreover, the US sovereign debt cds is falling -9.8% to 37.0 bps. Oil and Gold are lower despite a jump in the euro, rising tensions with Iran and declining economic fear. On the negative side, Gold, Steel, Paper, REIT and Education shares are underperforming, falling .5%+. (IYR) is a bit heavy today. Investor angst remains relatively low and breadth is subpar. Shanghai copper inventories are hitting another new high, rising +5.1% today, and have risen 19.2% over the last five days. One of my longs, (GOOG), is outperforming today on positive analyst comments ahead of its earnings release on Thur. I still think the shares are attractive for both short-term and longer-term investors. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower energy prices, declining sovereign debt angst, falling long-term rates, investment manager performance anxiety and less economic fear.