So Much for the Teflon Dow: Ukraine, North Korea Join Market's Wall of Worry

By Lloyd Khaner  MAR 03, 2014 12:28 PM

Global events are starting to have an impact on the US stock market indices.

 


Crisis here, crisis there, but not a thing that impacts global commerce -- until now. Problems in the Ukraine with Russia could affect the flow of natural gas to Europe and that means potentially higher energy prices, and that ain't good for business. Not to let a vulnerable moment go unused, North Korea is throwing another temper tantrum.

The result? The Wall rises and worldwide market indices like the Dow (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX), Nasdaq (INDEXNASDAQ:.IXIC), SPDR Euro Stoxx (NYSEARCA:FEZ), and the Nikkei (INDEXNIKKEI:NI225) drop. Except China's Shanghai Composite (SHA:000001), that is, as it seems to have become the world's own private Idaho of equity markets -- it's a daily mystery there.

Here's a quick look at the worries facing stock market investors. 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.



UKRAINE: Will Russia back down, back away, or get its back up in an effort to maintain a tight relationship with (read: maintain control of) Ukraine? The markets want to know and want to know quickly.

NORTH KOREA: Someone is lighting off firecrackers again without permission. Big firecrackers.

QE: The Fed will keep tapering until the cows come home. Unless they are a big herd of unemployed cows, that is.

UNEMPLOYMENT: Rate of 6.5% about to be hit. Time to move those goal posts.

INVESTOR SENTIMENT: "TINA" is taking hold of the masses as the "There Is No Alternative to owning stocks" mentality sets in.

EUROPEAN ECONOMY: Better. Meaning, better get stronger soon or unrest will set in.

HIGH-FREQUENCY TRADING:
Lloyd: Story is that some newswires are cutting off your special access.
HAL: I knew you were going to say that before anyone else.
Lloyd: Stop that.
HAL: That, too. Old news.
Lloyd: Uh, nevermind.

CHINA: Doing a little fly fishing with its currency and its domestic lending just as a gentle reminder of who is and will always be the boss of it.

EXTENDED UNEMPLOYMENT BENEFITS: Gone. Now we wait.

RETAIL SPENDING: No longer the American pastime? Say it ain't so, Joe! . . . and Joanne.

CONGRESS: Did someone say, mid-term elections? Taxi!

US ECONOMY: Back to rooting for 2%-plus GDP growth in the first half of 2014.

ECB: "Give me inflation or give me -- the power to create it!"

EMERGING MARKETS: From hero to zero in a flash of financial outflows.

VOLATILITY: The teeter-totter market is back.

PMIs: Here we go again, putting our collective economic hopes in the anonymous hands of purchasing managers worldwide.

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.
No positions in stocks mentioned.

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