Just as we enter August’s glass pond-like market environment, the Hindenburg Omen floats into our blue skies. What is it? Well, it means that a lot of stocks are hitting 52-week highs while a lot of other stocks are hitting their 52-week lows, and it has, at times, precluded stock market downturns. So, it’s not seen as a good omen. If it were then perhaps we would call it the "Glenda the Good Witch Omen" or the "Tooth Fairy Omen," which we don’t. That said, the Hindenberg Omen does not have a perfect forecasting track record. Enough market folklore for now, your eyes look heavy.
What we know for sure is that the Dow
(INDEXDJX:.DJI), S&P 500
(INDEXSP:.INX), and Nasdaq
(INDEXNASDAQ:.IXIC) gave back some gains last week, but not gold or silver. The shiniest of the precious metals regained some sorely needed luster after the tarnishing they’ve received over the last few months. Don’t really know if it was demand, technical, currency-related or something to do with one magnetic pole of the sun flipping before the other one -- usually they are more in synch when they do this 11-year do-si-do, but the metal sisters are getting a bid while most everything else is languishing.
This week brings a shopping cart of economic numbers, but nothing that is likely to send us careening into the soup can endcap. Unless, of course, the housing numbers on Friday are too weak or too strong. Housing start Goldilocks, we hope you haven’t headed out on vacation just yet.
Click on the image below for comments about the specific worries
facing investors this week, or scroll down for a text-only version of this story.
QE: Odds are that the tapering begins on September 18. Odds also are that this consensus opinion will waver with every new economic release until then.
UNEMPLOYMENT: Plenty of people free for the annual running of the bulls as the IMF (International Monetary Fund) projects Spain’s unemployment rate stays above 25% for the next five years.
US ECONOMY: Not too hot, for sure; not too cold, probably; so here we are back in Goldilocks territory, though it has more of an Alice in Wonderland feel to it.
INVESTOR SENTIMENT: Lots of seasoned pros sounding the “look out below” signal! Most of them doing it from the comfort of their beach chairs.
HOUSING CRISIS: A guy made a house out of a garbage dumpster. Maybe it is starting to feel like 2007 again.
EUROPEAN ECONOMY: You go from zero to hero if you put up a positive GDP number for the second half of 2013.
VOLATILITY: Licking its inanimate chops as we move into a “low/no news period.”
Lloyd: Considering the low volume environment, you ever think about becoming a low
HAL: That’s like asking a lightning bolt to slow down.
Lloyd: Enjoy that God complex.
CHINA: Seems to have drawn a 7.5% GDP growth line in the sand. Let’s hope the sands don’t shift downward.
GLOBAL ECONOMY: Introducing a new and old saw, and the seven most dangerous words in economics: Growth will improve in the second half.
JAPAN: GDP numbers come up short, meaning stimulus measures will come up long.
SEQUESTRATION: Wondering when A-Rod starts blaming it for his financial woes.
BONDS: Detroit may not be the last Detroit. Municipal bond players, you’ve been officially warned.
TECHNICALS: Hindenburg Omen (lots of new highs and new lows at the same time) floats into the market’s blue skies.
CENTRAL BANKS: Australia puts up its “Will Work for Less” sign as it cuts interest rates to weaken its currency.
THE NIKKEI: Full speed ahead and damn the fundamentals!
SHIBOR: “Down goes Shibor! Down goes Shibor!”
BRAZIL: How hurtin’ is hurtin’? Brazil is actively looking to cut a trade deal with the eurozone. Yeah, a two-way trading deal.
SPAIN: Location of the mother of all step classes as the recent construction of a twin 47-story tower without an elevator (oops!) pretty much sums up how things are going there.
OIL PRICES: Holding at seemingly elevated levels, so either the global economy is improving, or risks of war-related supply disruptions are rising, or both. Or neither. The Wall is always glad to be of service, ma’am.
So much for carefree travel this August.
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.
LK/KCLP Ownership Disclosure: SPY, DIA, GLD, TBF, LQD
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