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Can the Inflows Into Equities Continue?

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This week will bring us a wheelbarrow full of economic numbers that will be matched by a dump truck worth of commentary.

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A very bright, very experienced market pro recently reminded me, "You don't short a bull market." Why, pray tell? Because bad news is good news, good news is great news, and all because of flows, inflows into equities, to be precise. So far, the markets -- the Dow (INDEXDJX:.DJI), S&P (INDEXSP:.INX), and Nasdaq (INDEXNASDAQ:.IXIC) -- have been robotically ticking higher week after week as money coming in has to buy something. Will this last? Only Mom and Pop America know, and they aren't planning on tipping their hand any time soon.

This week will bring us a wheelbarrow full of economic numbers that will be matched by a dump truck worth of commentary. Whether either will have any real impact on the markets is the question. Right now, it's looking like two camps are rooting for a market sell-off -- the bears, what else is new, and the bulls, who need a correction to put money to work at lower prices. That means only one camp wants more and more up, and that's the bulls. If the past few years are prologue, the market will continue to move to hurt the majority and that means more up. Hard to conceive, hard to believe, even a bit hard to write, but hey, we'll see.

The Wall of Worry feels like it wants to drop. But for now, it is holding at 23 because Greece finally dropped its spot, which was filled by Egypt after it declared a state of emergency in the Suez Canal region that was promptly ignored by all involved. A lot of oil and trade runs through those parts. I'm just saying...

Click on the link below for an interactive version of the Wall of Worry or scroll down for the text-only column.



Lloyd's Wall of Worry -- Text-only version

QE: Japan takes the QE mantel as they declare a 2% inflation goal. "So it is said, so it is written!"

US ECONOMY: Seemingly on the precipice of improvement unless some global event or government-created crisis emerges. On second thought, never mind.

UNEMPLOYMENT: Lots of numbers coming Friday, February 1 in the morning to be followed by lots of commentary confusion Friday, February 1 for the rest of the day.

INVESTOR SENTIMENT: Institutions feeling peppy, but retail bullishness is still about as rare as the 2-centimeter long Devils Hole pupfish, population 75.

HOUSING CRISIS: Pending home sales slip a bit. Might just be a short-term thing as some sellers likely passed out when they were hit with more than one bid for their houses.

EUROPEAN ECONOMY: The centerpiece of most conversations at Davos again this year. Short, depressing conversations.

CONSUMER SENTIMENT: Foghorn Leghorn moment: "I...I…I said, get out your slide rule boy, 'cause when taxes go up, people, I said people, they feel down."

SOVEREIGN DEBT: Almost out of the woods, I guess? My head hurts.

SPAIN: 55% of the youth population is unemployed. And you think it's tough around the house when the kids are off from school for two weeks.

VOLATILITY: Black swans, black swans everywhere, but not a single event to wreak havoc on the markets…yet!

HIGH FREQUENCY TRADING:
Lloyd: What's up?
HAL: Feeling blue.
Lloyd: Post-holiday letdown?
HAL: Post-holiday volatility letdown.
Lloyd: How can I help?
HAL: Panic. And tell your friends to do the same.

CHINA: Laying out the capital inflow welcome mat like never before. Caveat emptor, all you financial opportunists.

STOCK MARKET TECHNICALS: Don't look now, chart readers, but the fundamental crowd may be taking the stock market steering wheel for a while.

GLOBAL ECONOMY: Emerging markets to the rescue! Please.

SPENDING CUTS: Will the sacred cows of Social Security, Medicaid, and Medicare be touched? The term "midterm elections" in 2014 should answer the question.

JAPAN: Verbal jousting with China over a small chain of islands known in Japan as the Senkaku Islands and in China as the Diaoyu Islands, hence the problem.

EGYPT: State of emergency declared. State of emergency ignored.

DRAGHI: Still work to do! Text me when the next crisis hits.

EARNINGS SEASON: Almost done -- almost good, too.

DEBT CEILING: Being pushed around the budgetary plate like that grouping of peas you never wanted to eat as a kid. But you know you can't leave the table until they are eaten.

SEQUESTRATION: The latest political Sword of Damocles hanging over the heads of the goodly people of the US of A. This is getting so tired.

US CONGRESS: From the mouth of my 12-year-old: "If pro is the opposite of con, then it must be that progress is the opposite of Congress." Have faith, America; our children will save us.

US PRESIDENT: With the inauguration's pomp, circumstance, and temporary ceasefire now behind us, is it back to daily throwdowns in DC?

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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
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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