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It's the Teflon Dow: The Wall of Worry Dips to Within Reach of Dangerous Complacency


For now it remains at a comfortable level; there's just the right amount of market anxiety in the air.


Throw Venezuela at it? Nothing. Throw Turkey at it? Nothing. Ukraine? Nothing. Russia? Nothing. Syria, Egypt, India? Nothing, nothing, nothing. Nothing will stick to the Dow (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX) and Nasdaq (INDEXNASDAQ:.IXIC) unless it has a direct impact on the global economy. If you could hear the sound of the market's heartbeat, it would be, "G-D-P, G-D-P, G-D-P. . . ." Nothing changes.

That said, the political and social uprisings in some key parts of the world certainly have the potential to spill over into the financial world. Russia and Ukraine: This one is about natural gas flowing from Russia across Ukraine and into Europe. Turkey: This one is about government corruption. India: This one is about inflation. Syria? Its crisis is about civil war. Egypt's turmoil is about an ongoing transition of government. Venezuela? That one is about a few people taking control of a once-glorious country. None of them add up to a hit to worldwide economic growth. For now.

The Wall dips down to a comfortable level but is getting within reach of complacency. And, as you Wall readers know, worry is good, complacency is bad. It looks like we will tip one way or the other soon. Which way we fall? We'll see.

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.

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.

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.


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.

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Positions: QQQ, GLD, TBF, VGK, FEZ, EUO.
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