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Who's Your BFF? The VIX!


Lloyd's Wall of Worry sees more volatility ahead as earnings season continues and investors wait for Thursday's bond auction in Spain.

It was fun while it lasted, or the fun has just begun, depending on whether you're a bull or a bear, as the Dow (^DJI) just lost half its annual gain last week, while the S&P (SPY) got clipped for a third. But there's always a winner, and it is…the VIX (^VIX), which finally got up off the mat and started swinging wildly.

Looks like more of the above to come as earnings season goes into high gear and the European Monetary Union goes into prayer mode. So chose your animal. Are you a bull, a bear, or have you gone out to pasture with the majority of market players – sheep?

Click on the graphic below for a short comment about each of the 25 issues facing investors, or scroll down for a text-only version of this
column and an explanation of how it works.

Lloyd's Wall of Worry -- Text Only

QE: Damned if we do, damned if we don't. The question is, when do we want to be damned?

US ECONOMY: Growing or slowing? Like in spring 2010 and 2011, it's that magical time of year again when we find out.

UNEMPLOYMENT: Number of net new jobs created in March: 120,000. "Ahhh, freak out! Le freak, c'est chic...."

INVESTOR SENTIMENT: Hard to gauge as there may not be any actual "investors" left. Though there may be one in the Smithsonian; I'll get back to you….

HOUSING CRISIS: Inventories high, delinquencies high, foreclosures delayed. Remedy? Housing starts rising -- build, baby, build!

CENTRAL BANKS: Herd mentality goes to government as we are about to enter the first-ever period of 100% participation in global liquidity pumping.

EUROPEAN ECONOMY: Austerity moves up, economy moves down. Austerity moves down, economy moves down. Austerity moves down, economy moves down. Buena suerte, buona fortuna, boa sorte, viel glück, bonne chance, or as we say outside the EU, "good luck."

THE EUROPEAN UNION: Member relations fraying a bit as French presidential-election rhetoric goes populist. Shocking turn of events from politicians under pressure, huh?

SOVEREIGN DEBT: Yields rising just in time for a few big offerings. Or is the phrase, "right on cue" more appropriate?

SPAIN: Game of the week as the markets await their big Thursday bond auction.

10-YEAR TREASURY YIELDS: This bull market, like all before it, is dying hard with a vengeance… and a side of panic.

FINANCIAL INSTITUTIONS: Fighting for their future profitability as government encroachment zeroes in. Mr. Glass, Mr. Steagall... we have a call for you on line one….

VOLATILITY: BFF, thy name be VIX!

Lloyd: Heard a great quote.
HAL: Waiting.
Lloyd: "When fighting angry, blind man, best to just stay out of the way."
HAL: Guess that means you'll be taking off the next few months.

CHINA: Markets used to fear they would take over the economic world; now they fear they won't.

STOCK MARKET TECHNICALS: Back in the driver's seat as future fundamentals come into question. Buckle up and check the airbags.

IRAN: Working feverishly with global power players to delay a deal that would delay the suppression of their nuclear ambitions. We should know by June unless the delay deal is delayed.

OIL PRICES: Brent hits $150 and its game-over. Brent hits $75 and its game-over. In between we can comfortably stay in high-fret mode.

INDIA: All 'n all its just another BRIC in the wall…whose economy is slowing down.

EARNINGS SEASON: It's the 85th earnings season of my career, and that magical feeling is still there. Has anyone seen my Dramamine?

US PRESIDENTIAL ELECTION: "If you start me up, if you start me up I'll never stop…."

The ultimate quantitative easing junkie and trader favorite SPDR Gold Shares (GLD) had a tough March though potential April QE showers may bring golden May flowers.

NORTH KOREA: Look who's back -- the guy who couldn't shoot straight. Let's hope it stays that way.

FRENCH ELECTIONS: Likely the biggest test of socialism (Hollande) vs. capitalism (Sarkozy) this year. Can you guess which way the markets want this to go?

THE CLIFF: January 1, 2012. As the Bush tax cuts expire, a combo meal in the US will include a Jumbo Tax Burger, a side of Sequestration Budget Cut Fries, and an Ice Cold Congressional Stalemate to wash it all down. Let's call it "The Not-So-Happy Meal."

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.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
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