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Markets Go Out Like a Lamb, Come In Like a Lion -- and Are Set to Repeat?


All signs indicate that the wall of worry is going to rise and fall more than usual this year.

The Dow Jones Industrial Average (^DJI), the S&P 500 (SPY) and the NASDAQ Composite (^IXIC) may have tiptoed out of 2011, but they charged their way into 2012. All averages moved up meaningfully in Day 1 of the year -- and we have only 364 more to go. Not to be overlooked are the ETFs for gold (GLD) and silver (SIL), which rocketed up 2% and 7% respectively. It's going to be a long year with a lot of volatility. Let's hope it's up volatility.

Here's to a happy, healthy and prosperous New Year for all of us Wall of Worriers.

For a text-only version of this column and explanation of how it works, scroll down. Otherwise, click on the graphic below for a specific comment about each worry facing investors this week.

Lloyd's Wall of Worry

Inflation headline numbers still low so chances of US QE still high.

US ECONOMY: "Ain't no stoppin' us now, we got the groove…." A barely GDP positive, high unemployment, weak housing market, rising inflation groove….

UNEMPLOYMENT: Just like the rent, Jimmy McMillan would say: "It's too damn high!"

INVESTOR SENTIMENT: Has left the building.

HOUSING CRISIS: 2012 is its five-year "wood" anniversary. To be celebrated with a piece of driftwood in an effort to help underwater mortgage holders stay afloat.

CENTRAL BANKS: The Wall of Money has started. Hard to see as it is a glass wall, but a wall all the same…will it hold?

CRISIS OF CONFIDENCE: Confidence is emerging! Confidence that this year will not be more confusing than last year. Sigh.

EUROPEAN ECONOMY: Going subterranean.

THE EUROPEAN UNION: "Oh lets, let's stay together, lovin' you whether, whether, times are good or bad, happy or sad…."

SOVEREIGN DEBT: Can I interest you in a light, bubbly, effervescent vintage 2012 $8 trillion debt auction?

BOND VIGILANTES: Barring a Mayweather/Pacquiao galactic superfight, this is the one bout to watch this year.

GREECE: Next few months are critical as it needs another bailout. To be followed by a few more critical months anticipating the next bailout.

IMF: Dear IMF, I hereby grant you the 2012 Nobel Prize for Economics. Now, I expect you to earn it because nobody else will.

ECONOMIC LEADERSHIP: We're not gonna find it. Can we just stop looking now, Mom!?

POLICY CLIFFS: US government in its entirety taking Murphy's Law to a level not seen since Chicxulub crater 65 million years ago.

BANKS: You borrowed it, now lend it or give it back. Investors, don't hold your breath on those last two.

VOLATILITY: Just gonna put on my astronaut diaper and ride this bronco till it busts.

Lloyd: Good New Year's?
HAL: Quiet. Stayed home. Debugged. Watched WarGames.
Lloyd: Good movie. Pop classic.
HAL: True. But I prefer happier endings.

CHINA: How will the Red Giant deal with the fact that its equity market was down over 20% in 2011? Please feel free to comment on this Holy Grail question.

STOCK MARKET TECHNICALS: When all else fails the fallback move is to follow the technicals…even when they are failing as well.

EARNINGS SEASON: I await it with bated breath and helmeted head.

CORRELATION: "Same as it ever was, same as it ever was, same as it ever was…."

CREDIT WATCH: Alright ratings agencies, we are bent over and waiting. "Assume the position…thank you, sir, may I have another!"

IRAN: Gonna be a war of words type-of-year from Iran -- and hopefully nothing more.

NORTH KOREA: Rumor is they are secretly engaged to South Korea. A wedding would be nice, but not a shotgun wedding.

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.

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No positions in stocks mentioned.
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