Will Spain Pop the Question This Thursday?

By Lloyd Khaner  SEP 25, 2012 12:45 PM

Before we get to October, we could use some help from our friends in Spain, who could use some help from the ECB.

 


MINYANVILLE ORIGINAL  As the S&P 500 (INDEXSP:.INX), DOW (INDEXDJX:.DJI), and NASDAQ (INDEXNASDAQ:.IXIC) continue their soft shoe out of September to the tune of the “Low Volume, Low Volatility Shuffle,” financial players are starting to look ahead to October and wonder if this historical month of market crashes will rear its angry head. To wit (whatever that means), my analyst friend says, since 1950, October has been on average a net positive month for the stock market. And since all of us investors are above average, October should keep this market moving higher right?  Well…?
 
Before we get to October we sure could use a little help from our friends in Spain. Or more accurately, our friends in Spain could use a little help. All they have to do this Thursday is ask the ECB for bailout money and the answer will be yes. Billions of euros? Yes. Tens of billions of euros? Yes. Hundreds of billions of euros? Yes.  Yes to hundreds of billions of euros and yes to hundreds of billions of strings attached to them as a bonus. Hey, no such thing as a free almuerzo, as they say.

Click on the image below to read a comment about each of the worries facing investors this week, or continue to the next page for a text-only version of this column and an explanation of how it works.

Wall of Worry -- Text Only

QE:
Under the heading of “Go Strong or Go Home,” the US Federal Reserve has just bolted away from home -- far, far away from home.
 
US ECONOMY: The envy of many around the world. Can you imagine what we could do if we had an actual economic plan?

MONDAYS: The markets have been down on the last 15 out of 16 Mondays. Welcome to "The Matrix."

UNEMPLOYMENT: “You need a busload of faith to get by…”

INVESTOR SENTIMENT: Still more interested in cupcake cooking shows and screaming show-moms than stocks. Totally understandable.
 
HOUSING CRISIS: Housing permits up, housing starts up, housing prices… kinda up if you look real close and include inflation and don’t include foreclosures, short sales, and houses with less than two garage doors, and….
 
EUROPEAN ECONOMY: With Germany’s economy getting pulled south by the southern states, how about a little unsterilized “Quantitative Lockerung”? (The German answer to QE.)
 
THE EUROPEAN UNION: European stocks up, up, up. Can we go back on vacation now?
 
SOVEREIGN DEBT: Ten-year yields in Spain and Italy flirting with sub-5% levels. If Greece goes sub-20%, I guess we can sound the all-clear horn.
 
SPAIN: My Uncle Ziggy always told me that admitting you need help is sign of strength, not weakness -- something to be rewarded not punished…. Then he’d ask me for a couple hundred bucks.
 
VOLATILITY: Bumping up a bit but most often during the overnight session so only the true Vampire traders are taking the ride. HIGH FREQUENCY TRADING:
Lloyd: What’s your favorite app?
HAL: It’s a link to a video of people standing in a long line, waiting for their turn.
Lloyd: Sounds ridiculous.
HAL: Hey, you’re finally coming around.
 
CHINA: Good news -- after a couple of disorienting weeks, they found their future paramount leader. The world economy may now return to its regularly scheduled confusion.
 
STOCK MARKET TECHNICALS: Sometimes one market pattern morphs into another market pattern. Coincidentally, this often happens when no one is quite sure exactly what’s going on.
 
GLOBAL ECONOMY: Now, not so good. But in six months... it better be picking up.
 
CONSUMER CONFIDENCE: “It’s beginning to look a lot like (there’s going to be a) Christmas…”
 
US PRESIDENTIAL ELECTION: Only about $2 billion in political advertisements left to go before the big day.
 
THE MIDDLE EAST: Too depressing to comment on; too serious not to comment on.
 
THE CLIFF: Positive Fed Chair comment? Go back and check minute 55-56 of Fed Chair Bernanke’s Q&A session during his September 13 FOMC press conference. I think I heard him say, “If the fiscal cliff does occur, I suspect it won’t and I hope it won’t...."
 
GREECE: My ring fence idea here: Greece and Portugal steal away westward for a quickie Vegas wedding. Consolidate their debt; keep it from messing up any other economy.
 
JAPAN: Scuffling over a few islands with China. Not for nothing but the history of this kinda thing is not good.
 
DRAGHI: Interest-rate cut coming? Many in the eurozone say it isn’t needed. Which prompts the question: What does “need” have to do with anything?
 
ITALY: Who’s your daddy? Does the eurozone own Italy or is it really the other way around?


What Is Lloyd's Wall of Worry?
by Lloyd Khaner

Welcome to my at-a-glance guide to the issues facing investors this week -- a unique tool for traders and money managers.

Typically the term "wall of worry" refers to the entire body of concerns influencing stock market action. When the wall is high, meaning the market is nervous, stocks tend to get cheaper.

This wall of worry is even more specific. Every week I list the exact concerns in the marketplace and use the list to help me make buying and selling decisions. As I like to say, "Buy fear, sell cheer."

In other words, once the the wall rises above 15 blocks, start looking for deals. If the worry count sinks below 10, consider selling; prices have likely peaked.
Position in SPY, QQQ, GLD

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