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Earnings Should Be Good Enough to Keep the Market Rally Alive, But...

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The Wall gains a couple of worries as economic growth concerns take some air out of small- and mid-cap stocks while the Dow and S&P 500 mostly hold off a long-awaited (and perhaps hoped for) US market correction.

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Well, last week's jobs numbers didn't light us up, but perhaps this week's earnings number will. Or won't. Consensus seems to be around "so-so" -- for our international readers, that's tan-tan, bof, maa-maa, and bu ze me yang. I figure we will get a decent amount of talk about uneven demand, low inventories, and an optimistic view of the second half of 2013, if Europe doesn't get worse. If Europe, if Europe, if Europe – the words I hear in my head as I lay me down to sleep every night.
Further east, it looks like the Asia region is ready to grab the helm of discontent from Europe. China is dealing with an avian flu situation, and North Korea has convinced the world that the fruit doesn't fall far from the saber-rattling tree. China and the vast media world seem to be on top of the bird flu story so hopefully this gets the attention it needs. As for North Korea, attention may not be enough this time. What will work? You got me, brother. All I can say is that if something does get launched, it better hit water.
The Wall gains a couple of worries as economic growth concerns take some air out of small- and mid-cap stocks while the Dow (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX) and Nasdaq (INDEXNASDAQ:.IXIC) mostly hold off a long-awaited (and perhaps hoped for) US market correction. The rest of the world markets are having corrections. China is even negative for the year, and Europe has weakened as of late. Lest we forget the "most improved" category, Japan continues to rip higher as there is nothing to worry about there (wink wink).

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


UNEMPLOYMENT: Whiff!
INVESTOR SENTIMENT: Many people at the open door of the plane ready to take the dive into the market... and most of them worrying that the parachute won't open.
HOUSING CRISIS: Feeling like lift-off at Kitty Hawk, which is good, but we're still only a few feet up in the air.
EUROPEAN ECONOMY: Austerity living not so popular after all. Really? And it looked so good in the brochure.
FRANCE: Missed its 2012 deficit goal and has already declared defeat in reaching its 2013 goal. The goal for 2014 will be set during 2015 so to guarantee success. Voilà!
ARGENTINA: New millennium debt restructuring history -- No. 1 in 2005, No. 2 in 2010. Will No. 3 in 2013 be the charm?
SPAIN: Thinking about declaring 2013 a siesta year and coming back renewed and refreshed in 2014.
VOLATILITY: Not enough for you in the equity markets? Try the Bitcoin non-currency currency market. Virtual currency with the best virtual volatility you're gonna find.
HIGH-FREQUENCY TRADING:
Lloyd: Dark Pools now accounting for up to 40% of market volume. Amazing, right?
HAL: I don't like the lack of transparency.
Lloyd: Said the monkey to the chimp.
CHINA: H7N9 bird flu strain just flew in. SARS redo? We certainly hope not.
ITALIAN ELECTIONS: Still no government formed and none expected. You know, I think it's actually helping the country.
GLOBAL ECONOMY: Not so bad if you leave out the turf in the middle (a.k.a. Europe).
US SPENDING CUTS: Grand bargain on the way? More likely a grand illusion that's already here.
JAPAN: Auto sales down 15+%. Got your walking shoes out, folks?
EARNINGS SEASON: The market is not expecting much. It better not get less than that.
DRAGHI: The Euro Bernanke? The markets hope so.
NORTH KOREA: Helmets on. This kid might just light up some of his rocket toys.
SEQUESTRATION: Can we get one of these things for Congress in general?
CYPRUS: Not to worry -- this case was the exception, not the rule. I'm afraid to find out what the rule is going to be.
UK: Condolences for the loss of the Iron Lady. Keeping a third recession in five years at bay would be a nice tribute to her.
PORTUGAL: So far, not as scary as the Cyprus situation from what I know. But it's what I don't know that scares me.


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.


See also:

A Budget iPhone Is a Bad Idea

The Basics on Bitcoin: 11 Things to Know About This Suddenly 'Hot' Digital Currency

The PC Isn't Dead, It's Just Gone 'Ultramobile'
Positions in SPY, IWM, DIA, XLF, GLD, IWO, IWN.
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