Non-Farm Friday Coming, Can We Stay Above the 200K Mendoza Line?

By Lloyd Khaner  APR 02, 2013 12:00 PM

Plus: Argentina becomes "top contender" for the world's next sovereign debt catastrophe.

 


Who buys cars and houses, the main elements of the US economic recovery? People with jobs do, that’s who. So here we sit, staring down a quasi-holiday week (Happy Easter, Worriers) non-farm payroll number that needs to be near or above the 200,000 mark or the long-awaited market correction may be upon us. For the baseball challenged, the Mendoza Line refers to Mario Mendoza, a baseball player who struggled to keep his batting average above a failing -- dare I say, job-losing -- .200 level. C’mon, Mario!
 
Back in basket case central, Cyprus and the rest of the eurozone circus remain top of mind, while Argentina keeps poking its massively indebted head up to get some financial relief love from the ROTW . Let's look back in history for a moment: Argentina defaulted on $81 billion of debt in 2001 only to have it restructured down to $.35 on the dollar, give or take. I’m not saying Argentina is heading in this direction again, but I’m not saying it isn’t -- or that many other heavily indebted countries aren’t, either. We've just got too much debt in this world, folks. Time will heal this wound, but the healing has yet to really begin.
 
As the Wall drops two notches, life in multiple expansion bull marketville continues to see the Dow (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX), and Nasdaq (INDEXNASDAQ:.IXIC) continue to move higher. So, here we sit with one month to go before the Sell-in-May-and-Go-Away-Crowd starts ranting at us. Earplugs, anyone?

Click on the image below for an interactive version of this week's Wall of Worry, or scroll down for the text-only version.
 

 
QE: Excuses to keep it flowing, ah…um…Europe is a basket case! “Yeah, that’s the ticket.”
 
US ECONOMY:
“There’s no need to fear, consumer confidence is here!”
 
UNEMPLOYMENT: Non-farm payroll number hits on April 5, hoping to stay above the market’s 200K Mendoza Line.
 
INVESTOR SENTIMENT: “Greed is the word, is the word, is the word that you heard, it’s got groove, it’s got meaning…”
 
HOUSING CRISIS: Feeling like lift-off at Kitty Hawk, which is good, but still only a few feet up in the air.
 
EUROPEAN ECONOMY: Austerity living not so popular after all. Really? And it looked so good in the brochure.
 
FRANCE: Missed its 2012 deficit goal and has already declared defeat in reaching its 2013 goal. 2014’s goal will be set during 2015 so to guarantee success. Voilà!
 
ARGENTINA: Top contender for next sovereign debt catastrophe. Congratulations from all of us at the financial crisis center.
 
SPAIN: Thinking about declaring 2013 a siesta year and coming back renewed and refreshed in 2014.
 
VOLATILITY: Still pushing around individual stocks pretty hard, but the averages will have none of it…for now.

HIGH FREQUENCY TRADING:
Lloyd: Dark pools now accounting for up to 40% of market volume. Amazing, right?
HAL: I don’t like the lack of transparency.
Lloyd: Said the monkey to the chimp.
 
CHINA:
Fretting over their overheated housing market. Silly me, I thought that was their goal.
 
ITALIAN ELECTIONS: Still no government formed and none expected. You know, I think it’s actually helping the country.
 
GLOBAL ECONOMY: Not so bad if you leave out the turf in the middle (a.k.a. Europe).
 
SPENDING CUTS: Entitlement Cuts may be coming over and bringing his cousin Tax Revenue with him.

JAPAN: Auto sales down 15+%. Got your walking shoes out, folks?
 
EARNINGS SEASON: New one coming. Did we even finish the last one yet?
 
DRAGHI:
Gonna whisper sweet somethings in our ears on April 4, Mario? We sure could use some.
 
NORTH KOREA: The US sends over some B-2 Bombers as a warm fuzzy to our friends in South Korea, and to cast a long, 50,000-foot shadow on those in the North.
 
SEQUESTRATION: This tree fell, but did anyone hear it?
 
CYPRUS: Not to worry -- this case was the exception, not the rule. I’m afraid to find out what the rule is going to be.

(See also: Earnings Season on Deck: Where to Put Your Money Now)


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.
SPY, IWM, DIA, XLF, GLD, IWO, IWN

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