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Super Low Market Volumes Usher in the Ghost of the 1970s Market. More to Come!

By

When was the last time we had a legitimate summer slowdown? It's not a rhetorical question.

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MINYANVILLE ORIGINAL I finally understand why the 1970s was the golden age of the desktop office toy -- there wasn't a whole lot else going on. Low market volume begged for some kind of movement somewhere on the desks of decision makers, and henceforth there appeared a flood of Newton's Cradle swinging ball things and chrome skiers rocking back and forth. This may be just a "summer lull" rather than the beginning of watching water boil for the next five years. That said, when is the last time we had a legitimate summer slowdown? That question is not rhetorical. We batted it around the office here, and we can't remember the action getting this depressed since the mid-1990s.

That said, the market's life goes on regardless. And last week brought us yet another creep higher in the Dow (^DJI), the Nasdaq (^IXIC) and the S&P 500 (SPY), while the Russell 2000 (IWM) got a stealthy near 2% boost higher. This week, we get a few numbers, a few earnings reports, a few euro meetings, and most likely, only a few trades as the markets drift up, drift down, and drift forward. My advice: Take advantage of the lull; it won't last forever.

For a comment on each of the 23 worries facing investors this week, click on the link below or scroll down for a text-only version of this column. Also see, "What Is 'Lloyd's Wall of Worry'?" at the bottom of this page for an explanation of how the "Wall" can be used as an investing tool.




Lloyd's Wall of Worry -- Text only

QE: Like that extra slice of pizza that I'm not really hungry for but I eat anyway, can't we have one more piece of QE even if we don't really need it?

US ECONOMY: Meh.

UNEMPLOYMENT: Keep your eyes on the jobless claims…and the online job listings.

INVESTOR SENTIMENT: "Run, run, runaway, runaway baby…."

HOUSING CRISIS: Only a genius could solve this situation, and the only one I know just passed away – R.I.P. Mark O'Donnell, R. I.P.

CENTRAL BANKS: All the leaders on the beach at the moment. But you get the feeling their chairs are close together and a lot of chatting is going on in between the volleyball games and sand castle building tournaments.

EUROPEAN ECONOMY: The Law of Gravity being what it is, Germany is being pulled into economic descent along with the rest of the European mass.

THE EUROPEAN UNION: Fore! Maybe getting some new members would perk things up here. Hey, Augusta National just accepted its first female members, so anything is possible.

SOVEREIGN DEBT: If there were ever a time and place for a "cash for clunkers" deal, this is it.

SPAIN: Things are so bad that you'd think they hosted the last Olympics. And London, I got some bad news for you...

VOLATILITY: Is it possible that "volatility" is not an asset class unto itself? Sheesh, if you can't trade the velocity of change what is this financial world coming too?!?

HIGH FREQUENCY TRADING:
Lloyd: How are you dealing with the low volume environment?
HAL: Making mental trades. Never send the orders out.
Lloyd: You?
HAL: Yep. Trading with myself.
Lloyd: We humans have another name for that.
HAL: Remember that shrink you suggested--?
Lloyd: I'll get you his number.

CHINA: Making the claim that housing prices are stabilizing if not moving back up. Great, now how about the other 99+ elements of your economy following suit?

STOCK MARKET TECHNICALS: Major pivot point at 1420 on the S&P 500. From there, we go higher or lower. Big help, I know.

GLOBAL ECONOMY: Could someone take care of this thing? It's the only one we got.

CONSUMER CONFIDENCE: Ticks up a bit. Maybe people are getting hopeful that change is afoot and the world is about to become a healthier economic place. And maybe I've lost the few marbles I had left.

US PRESIDENTIAL ELECTION: We finally got a two-on-two going here. First team to 270 wins.

CREDIT MARKETS: Draghi is hinting that the ECB may put a cap on the yields of at-risk countries in the EU. And Chairperson/CEO/President/Queen Merkel didn't swat down the idea. Hmmmm...

THE CLIFF: Better chance of me doing a reverse slam dunk than Congress settling this thing before the end of the year. Oy vey!

GREECE Making the rounds in Europe this week, and likely making some noise at the same time.

FOOD COMMODITIES: So much for making "hay" while the sun shines. Too much sun is causing a shortage of hay and -- cue the financial markets -- a spike in hay prices.

EURO CURRENCY: Say what you want -- it still trades at a premium to the US greenback. I'm just sayin'...

ECB: "Like watching mice eat cupcakes," to borrow a line from Professor Nick, a friend of mine. Take a big market stabilizing bite already!

ITALY: Veni, vidi, vici already!



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.

Also see: 10 Photos That Tell the Story of Our Economy Right Now
SPY, QQQ, DIA, 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.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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