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Tortoise and the Hares: US Markets Lag as Europe's Take Off


Things aren't too bad here and in Asia, but it does seem like we are in digestion, rotation, correction mode.

So much for more of the same for the US markets as the Dow (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX), and Nasdaq (INDEXNASDAQ:.IXIC) have thus far ended their multimonth climb higher -- at least for the moment. The surprise rabbits are Greece and Spain as they are already halfway to double-digit positive returns for the year. Yes, I will wait while you go back and re-read that last sentence and then check a website to see if those indices are really up in 2014. Surprising, I agree.

So what gives? Basically the eurozone markets are looking for significantly better economic growth than they have had in years. Throw in the possibility that their combined unemployment rate of 12%-plus will drop into the single digits and you have yourself the making of a European Raging Bull. In addition, if Martin Scorsese directs it, I'll go see the movie version.

Back in the US and Asia, things aren't bad, but it does seem like we are in digestion, rotation, correction mode. It should be healthy for this bull, but with the debt ceiling and tapering out there being handled by a new leader, there could be some stomach-churning days or weeks ahead. Don't know, we'll see, but keep the antacid nearby just in case.

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: Whether you agreed with Chairman Bernanke's policies or not, you have to admit that he's been the hardest working man in Washington, DC, for a long, long time. For that, the Wall salutes and thanks him.

UNEMPLOYMENT: The figures say we're now in the six percents, but it sure doesn't feel that way on Main Street, USA. And as Grandpa Max used to say, "Figures lie and liars figure."

INVESTOR SENTIMENT: Now it's too bullish. Worry on, Worriers, worry on.

EUROPEAN ECONOMY: "Feelin' stronger every day…" at least stronger than last year, that is.

Lloyd: Any thoughts on the EU lawmakers passing legislation to curb high-frequency trading on their exchanges?
HAL: Doesn't go into effect for two and a half years. That's a millennium, in my world.
Lloyd: Looks like the US is likely to follow their lead.
HAL: Not a problem.
Lloyd: Looking for office space in Asia?
HAL: Signed a lease yesterday. Kanpai!

CHINA: It was the largest member of the not-so-sweet 16 countries that saw its stock market drop in 2013. And 2014 ain't looking gangbusters so far, either.

EXTENDED UNEMPLOYMENT BENEFITS: Not looking like this will pass Congress. Brace for impact?

BONDS: So much for a 4% yield on the 10-year Treasury being a foregone conclusion. Back to guessing if we see 2.50% again, and how soon.

CONSUMER CONFIDENCE: So far, so good; but let's check back after we get the reading sometime following the end of extended unemployment benefits.

RETAIL SPENDING: Monday, January 13 may just go down as Black Monday in the world of retail. Black-Eye Monday, that is, as brick-and-mortar sales and profits dropped while online sales spiked.

CONGRESS: "All talk, no action…"

US ECONOMY: Once again looked upon as the engine of the world economy. Hope an in-line four-cylinder will do... .

SEQUESTER II: Incoming….

ECB: Looks like Ben Bernanke's monetary-stimulus baton will be passed directly to Mario Draghi.

DEBT CEILING: Tick, tick, tick….

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

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 in SPY, DIA, QQQ, GLD, TBF, VGK, FEZ, EUO.
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