Stocks Slightly Higher into Final Hour on Falling Sovereign Debt Angst, Short-Covering, Declining Energy Prices, Less Economic Fear

Broad Market Tone:

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

Equity Investor Angst:

• VIX 24.60 -1.56%
  
• ISE Sentiment Index 91.0 -20.87%
  
• Total Put/Call 1.02 +15.91%
  
• NYSE Arms .81 -.88%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 112.02 bps -.59%
  
• European Financial Sector CDS Index 124.04 bps +5.66%
  
• Western Europe Sovereign Debt CDS Index 120.0 bps -2.57%
  
• Emerging Market CDS Index 246.67 bps +.11%
  
• 2-Year Swap Spread 31.0 unch.
  
• TED Spread 38.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .14% -1 bp
  
• Yield Curve 241.0 -1 bp
  
• China Import Iron Ore Spot $118.10/Metric Tonne -3.04%
  
• Citi US Economic Surprise Index -17.20 +2.4 points
  
• 10-Year TIPS Spread 1.84% +1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating +62 open in Japan
• DAX Futures: Indicating +14 open in Germany

Portfolio:

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

BOTTOM LINE: Today's overall market action is neutral as the S&P 500 trades flat, notwithstanding the decline in the euro, fall in commodities and recent stock gains. On the positive side, Road & Rail, Restaurant, Wireless, Disk Drive, Semi, Software and Internet stocks are especially strong, rising .75%+. The MS Tech Index is strongly outperforming, rising +.75%. (XLF)/(IYR) trade pretty well considering last week's gains. The 10-year yield is flat, but near session highs. The Western Europe Sovereign CDS Index is building on last week's sharp losses, which is a major positive. Moreover, the US Muni CDS Index is falling another -4.6% to 235.50 bps, which is also a big positive. On the negative side, Education, Biotech, Steel, Gold, Oil Tanker, Alt Energy, Coal and Defense shares are falling 1.25%+. China Import Iron Ore Spot prices continue to decline at a rapid rate. As well, Shanghai copper inventories, which had been declining, jumped +14.2% today. The European Financial Sector CDS Index is rebounding a bit after last week's sharp drop, which is also a negative. Overall, various key cds indices trade well considering last week's sharp drops. Today's quiet equity action appears to be a healthy consolidation of last week's sharp gains. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less real estate sector pessimism, falling sovereign debt angst, lower energy prices, bargain-hunting and diminishing economic fear.