Markets Sliding Into Release of FOMC Minutes and Jackson Hole Summit

By Lloyd Khaner  AUG 20, 2013 10:35 AM

Plus, in the US, we seem to have lost our affection for and affliction of discretionary retail shopping.

 


Last week, we saw the worst weekly drop in the S&P 500 (INDEXSP:.INX) and Nasdaq (INDEXNASDAQ:.IXIC) since June, and the Dow (INDEXDJX:.DJI) had its lousiest showing in all of 2013 -- and this week hasn’t started off so well, either. What gives?

My best guess is that some economic numbers are coming in too strong and the market has gone straight up for too long. How long will this correction last? The range I’ve heard goes from an ominous "forever" to a gadfly "tomorrow." Therefore, it’s anyone’s guess.

Not yet on the Wall but worth keeping an eye on is the rapidly discombobulating situation in India. Our financial definition of "discombobulating" means that their currency is plummeting along with their stock market and economy while the inflation rate is rising quickly. Starting to sound like the bell-bottomed misery of the 1970s in the US to me. It’s something to watch carefully for sure.

Back here in the US, we seem to have lost our affection for and affliction of discretionary retail shopping. Sure, we’re still buying cars, houses, and couches, but not that sixth pair of sneakers or that twelfth handbag. Is it a big worry? I’ll let you know after Christmas... which is just a few short months away.

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





QE: Minutes from the July FOMC meeting will be released on August 21 and tweezer-parsed until October 9 when the next minutes are released.

UNEMPLOYMENT: Good news: Jobless claims haven’t been this low since 2007... a few months before the financial world temporarily ended.

US ECONOMY: Improving but enough to take off the training wheels?

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: Recession declared over. Let the sluggish recovery begin!

VOLATILITY: Long stretch of less-than-1% daily market volatility ends with a relatively low-volume whimper.

HIGH-FREQUENCY TRADING:
Lloyd: Considering the low-volume environment, you ever think about becoming a low-frequency trader?
HAL: That’s like asking a lightning bolt to slow down.
Lloyd: Enjoy that God complex.

CHINA: Has its first "fat finger" moment driving the market up 5% intraday. Welcome to the “MMC,” a.k.a. the Mature Markets Club.

GLOBAL ECONOMY: Could someone check India for a pulse?

JAPAN: GDP numbers come up short, meaning that 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. Muni 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: Spending the month working on improving the sound and harmony of their barbershop quartet favorite, “ZIRP.”

THE NIKKEI: Full speed ahead and damn the fundamentals!

SHIBOR: Bobbing up and down like a message in a bottle, floating on an ocean of central government liquidity.

BRAZIL: How hurtin’ is hurtin’? Brazil is actively looking to cut a trade deal with the eurozone. Yeah, a two-way trading deal.

SPAIN: Home to the mother of all step classes as the recent construction of a twin-47-story tower without an elevator (oops) pretty much sums how things are going there. 

OIL PRICES: Oil prices remain elevated along with Egypt’s number of civil clashes. All eyes are back on safeguarding the Suez Canal and SUMED (Suez-Mediterranean) Pipeline.

RETAIL SPENDING: The American consumer is holding back on buying most things smaller than the average size dinosaur, or a car for you non-paleontologists.

JACKSON HOLE: Most central bank chiefs will not be attending, but potential future US Fed Boss Janet Yellen will be speaking, so while the world won’t stop spinning, it will slow to a crawl to listen. 


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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