Stocks Falling into Final Hour on Global Growth Concerns, Tech Sector Weakness, Growing Mideast Unrest, More Shorting

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Slightly Below Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 17.58 +2.99%
  
• ISE Sentiment Index 119.0 +35.23%
  
• Total Put/Call .92 -1.08%
  
• NYSE Arms .80 -52.94%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 88.76 +.59%
  
• European Financial Sector CDS Index 93.17 +.99%
  
• Western Europe Sovereign Debt CDS Index 176.25 -1.67%
  
• Emerging Market CDS Index 205.50 -.28%
  
• 2-Year Swap Spread 19.0 unch.
  
• TED Spread 24.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .02% unch.
  
• Yield Curve 263.0 -1 bp
  
• China Import Iron Ore Spot $178.50/Metric Tonne -.17%
  
• Citi US Economic Surprise Index -38.30 -3.9 points
  
• 10-Year TIPS Spread 2.35% -2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -2 open in Japan
• DAX Futures: Indicating -24 open in Germany

Portfolio:

• Slightly Lower: On losses in my Biotech, Retail and Tech sector longs
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and added to my (EEM) short
  
• Market Exposure: Moved to 50% Net Long

BOTTOM LINE: Today's overall market action is bearish as the S&P 500 trades near session lows despite falling energy prices, less eurozone debt angst and falling long-term rates. On the positive side, Airline, HMO and Paper shares are especially strong, rising more than +.5%. (XLF) and (IYR) have outperformed throughout the day. The transports are also relatively strong. Gold is down -.07%, oil is falling -2.23% and lumber is rising +.91%. Silver is down another -4.1% today and has collapsed -32.1% in less than 1 month. The 10-year TIPS spread continues to weaken. The 10-year yield is falling -2 bps to 3.15%. The Spain sovereign cds is falling -4.22% to 225.51 bps, the Portugal sovereign cds is down -4.05% to 593.32 bps, the Ireland sovereign cds is falling -4.9% to 600.11 bps and the Belgium sovereign cds is down -6.58% to 126.53 bps. On the negative side, Gaming, Biotech, Networking, Disk Drive, Computer, Software, Internet, Oil Tanker and Alt Energy shares are under significant pressure, falling more than -1.50%. Small-cap shares are underperforming again. The tech sector is very "heavy" today. The US price for a gallon of gas is falling -.02/gallon today to $3.96/gallon. It is up .82/gallon in 89 days. The UBS-Bloomberg Ag Spot Index is rising +.34% and copper is down -.16%. The China sovereign cds is gaining +1.0% to 71.30 bps, the Israeli sovereign cds is gaining +.75% to 145.03 bps and the US Muni CDS Index is rising +.91% to 125.48 bps. Commodities continue to trade as if further downside is in store. The last time the 10-year TIPS spread broke down technically, which is a longer-term positive, the S&P 500 began a -15% correction in early May 2010. Moreover, the very poor technical action in key stocks, remains a large concern. Asian equities finished near their lows overnight. India's Sensex fell another -1.01% and is now down -10.55% ytd. Brazil's Bovespa also displays very poor technicals, falling another -.8% today and is now down -9.3% ytd. It appears as though more weakness in US stocks is becoming more likely over the coming weeks. I expect US stocks to trade mixed-to-lower into the close from current levels on technical selling, more shorting, eurozone debt worries, rising Mideast unrest, global growth concerns, emerging market inflation fears and profit-taking.