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Investors on High Alert: Is This an Eerie Calm or Just a Calm Calm?

By

There's plenty to worry about in the markets these days, the strange quiet being just one of many causes for concern.

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A calm stock market is not an altogether new phenomenon, but I for one can't tell you the last time it felt like this. This enhanced state of calm coupled with a curb height VIX (^VIX) has got some investors on high alert. They say when it gets like this, you better watch out! To which the Dow (INDEXDJX:.DJI), S&P (INDEXSP:.INX), Nasdaq (INDEXNASDAQ:.IXIC), and most markets around world reply, "Eh?" as they continue their slow, steady march higher.

Earnings season has started and so far it's not so bad, not so good, not so eventful. The bears warn again about complacency in the face of less-than-stellar earnings. The bulls, well, they're grazing quietly in the fields, looking for some new patches of grass and not getting riled up when they hit a patch of dirt.

This week's Wall gives the market plenty to chew on with the debt ceiling, sequestration, spending cuts, and basically anything US government related center of plate. If you're hungry for more, just take look below. But for now it just doesn't feel like a food fight is about to break out on Stockland Farm.

My long-gone boxing fan grandma used to say, "Sometimes you just can't get a good fight started no matter what's going on." As you can imagine, disagreeing with her was a mistake. For now, it seems the market doesn't want to disagree with her, either.

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: Latest Fed minutes offering a chance of hawkish behavior later in 2013 sending a few equity field mice scurrying about.

US ECONOMY: Stealthy as it may seem, it is entering its fourth year of economic expansion. Getting a little long in the tooth?

UNEMPLOYMENT: New record hit in Euroland. As economically confused as they are, they do know that more is less in this case, right?

INVESTOR SENTIMENT: Equities looking more and more like the only decent return game in town. And believe me, the money on the sidelines is searching every corner and inch of town.

HOUSING CRISIS: Normalizing in a hurry as inventories are down, shadow inventories are down, and lying about what you can get for your house is up.

EUROPEAN ECONOMY: 2013 offers more contraction again, but at a lower percentage rate than in 2012 -- kind of like breaking the same ankle again, but not as severely. Winning!

THE EUROPEAN UNION: May need to wait until after the German Chancellor election later this year until we can get some finger pointing blame going here.

SOVEREIGN DEBT: Many countries at multi-year low rates. What was all the fuss about?

SPAIN: How do you take the "joy" out of Rajoy? Take a poll as his popularity is back to an all-time low.

VOLATILITY: So low that its making people nervous. "If it's not one thing, it's another..."

HIGH FREQUENCY TRADING:
Lloyd: So what was your winning percentage in 2012?
HAL: 50.7%. A new record!
Lloyd: And how much did you spend on technology upgrades?
HAL: Over $50 million. Another record!
Lloyd: Who's better than you?
HAL: Me?
Lloyd: Thought that might stump you.

CHINA: Our economy, you ask? "Don't you worry 'bout a thing..."

STOCK MARKET TECHNICALS: "It's tricky, it's tricky, it's tricky-tricky, tricky-tricky..."

GLOBAL ECONOMY: This week, economists are saying it is looking like it will be better in 2013 than in 2012 with the caveat that next week's update may say the exact opposite.

US SPENDING CUTS: The promised crew cut is looking more and more like "just a little off the top and leave the sides alone."

JAPAN: QE in Japan entering its third decade. Now bigger and... well, bigger than ever.

GREECE: When the good folks are chopping down trees to burn to keep warm, it's time for someone to do something. Time!

DRAGHI: No interest rate cuts for you!

EARNINGS SEASON: "I'll take two more servings of uneventful with a side of somewhat positive expectations, please."

DEBT CEILING: The definition of insanity is "doing the same thing over and over and expecting different results" (Albert Einstein) to which I offer as exhibit A the Congress of the United States of America.

SEQUESTRATION: Looking like they may hit full force. Man, what kind of military industrial complex are you, America!?

US CONGRESS: Swearing in the new 113 Congress. I don't know what's worse, the swearing or the number 113.

US PRESIDENT: Only the president of the so-called wealthiest country in the world could consider starting a platinum coin collection.

More From Minyanville: 11 Must-Read Books for Beginning Traders.

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, QQQ, 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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