Stocks Rising Slightly Into Final Hour on Less Financial Sector Pessimism, Diminishing Economic Fear, Seasonal Strength, Technical Buying

Broad Market Tone:

• Advance/Decline Line: Slightly Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: Light
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 15.73 -4.61%
  
• ISE Sentiment Index 151.0 +9.42%
  
• Total Put/Call .90 +23.29%
  
• NYSE Arms 1.16 +96.93%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 84.94 -.37%
  
• European Financial Sector CDS Index 158.44 bps +3.80%
  
• Western Europe Sovereign Debt CDS Index 194.50 bps +1.04%
  
• Emerging Market CDS Index 176.28 bps -15.81%
  
• 2-Year Swap Spread 23.0 +2 bps
  
• TED Spread 17.0 -1 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .13% +1 bp
  
• Yield Curve 273.0 +2 bps
  
• China Import Iron Ore Spot $171.0/Metric Tonne +.65%
  
• Citi US Economic Surprise Index +14.30 -3.3 points
  
• 10-Year TIPS Spread 2.31% +3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +40 open in Japan
• DAX Futures: Indicating +26 open in Germany

Portfolio:

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

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades slightly higher despite recent stock gains, some earnings disappointments and rising eurozone sovereign debt angst. On the positive side, Defense, Disk Drive, Bank, Construction, Homebuilding and Education shares are especially strong, rising more than 1.0%. (IYR)/(XLF) have outperformed throughout the day again. The S&P GSCI Ag Spot Index is rising another +.5% and is very close to its record high set in Feb. 2008. Lumber is also rising +1.5%. The 10-year yield is stable again. On the negative side, Airline, Gaming and Steel shares are under mild pressure. The Greece sovereign cds is climbing +3.85% to 1,020.58 bps, the UK sovereign cds is climbing +4.86% to 72.41 bps and the Italy sovereign cds is rising +2.35% to 225.35 bps. The Euro Financial Sector CDS Index is rising to the highest level since mid-June and the Western Europe Sovereign CDS Index remains very near its record high set last month, which is also a big negative. The broad market continues to display exceptional resiliency as negatives continue to be ignored. The slow grind higher in the major averages to new 52-week highs could result in a short-term spike higher in stocks before any meaningful pullback commences as shorts throw in the towel and underperforming longs come in to finish out the year. A short-covering rally in the euro could be a potential short-term upside equity catalyst. I expect US stocks to trade mixed-to-higher into the close from current levels on seasonal strength, less economic fear, diminishing financial sector pessimism, short-covering, technical buying, buyout speculation and investment manager performance angst.