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The European Sky Is Falling and It's Not Even Friday


The Wall of Worry is high as the market starts tumbling, and no one had to wait for the end of the week this time.

This "place your bets Monday through Thursday and find out if you win or crap out on Friday" stock market is getting old fast, but doesn't look to be going away any time soon. Last week left the Dow (^DJI), Nasdaq (^IXIC), S&P (^GSPC), and virtually every other index on the planet with their worst five-day performances of the year. Even gold and oil folded under the pressure.

Coming this Friday, the betting rides on a slew of PPI numbers and a Consumer Confidence (a.k.a. "Lack of Confidence") report that promise plenty of pre- and post-time volatility. So will it be a good weekend or a bad weekend for investors? We'll find out Friday by 10:00 a.m.

This week's Wall of Worry remains uncomfortably high at 27 blocks. Click on the graphic below for a short comment about each of the issues facing investors, or scroll down for a text-only version of this column and an explanation of how it works.

Wall of Worry -- Text Only

Not yet back on the Fed's table, but certainly back on the menu.

US ECONOMY: Dreams of 4% GDP in 2012 dashed. Replaced with prayers for 2%+.

UNEMPLOYMENT: Eurozone unemployment about to bust through 11%. The operative word being "bust."

INVESTOR SENTIMENT: Bruised, snoozed, and confused.

HOUSING CRISIS: Housing market tremors hitting the Canadian and Australian metropolis markets. Good time to check out that mortgage paperwork, eh mate?

CENTRAL BANKS: With the world's central banks firmly in the driver's seat of the globe's economies and financial markets, that bike of mine is looking more and more attractive.

EUROPEAN ECONOMY: Can austerity lead to prosperity? Maybe in the long run, but in the short run it definitely leads to sitting governments getting unseated.

THE EUROPEAN UNION: Maybe the healthy countries -- like Germany and...uh, like, well…others -- leave, and the sick countries stay, devalue the euro, thereby reducing their debt load and making themselves more globally competitive. Won't that be a fun couple of days.

SOVEREIGN DEBT: A fire hose of misery on full blast.

SPAIN: Currently in the eye of the storm -- a storm that is roughly 3 million miles/10 million kilometers in size. That's 2% of the Earth's surface for all you globeophiles out there.

10-YEAR TREASURY YIELDS: As far as the investing public goes, "I can't, I can't, I can't get enough of your love…."

FINANCIAL INSTITUTIONS: "Ch-ch-ch-ch-changes, turn and face the strain…."

VOLATILITY: Spring has sprung, the volatility has ris', I wonder where the volume is.

Lloyd: You know, you never talk about your family.
HAL: Nothing special. Typical childhood.
Lloyd: Yeah, what about your parents?
HAL: "Mother was an incubator, Father was the contents…."
Lloyd: Walked right into that one.

CHINA: What will its 2012 GDP be? "Pick a number, any number…."

Calling out for a continued market correction at least, and a significant market drop at most. Leaving those looking for some near-term market ups without any calling whatsoever.

IRAN: Like a baby with a nuke-erector set. Backing down for the moment and crying foul -- Waaah! -- because no one wants to insure oil tankers carrying their "crude."

OIL PRICES: WTI (West Texas crude) goes sub-$100/bbl. Can Brent be far behind? Yes, actually it may be very far behind.

INDIA: PMI Index moves up to 54.9 from 54.7, which is better than nothing, while also being next to nothing.

EARNINGS SEASON: Done! Now for endless hair-splitting analysis as to whether it was better than expected, worse than expected, better than expected but expectations were low, worse than expected but expectations were high....

US PRESIDENTIAL ELECTION: If an Obama win is priced into the market, would a Romney surge cause a stock surge? It may be time to pick up another surge protector.

JAPAN: Getting a little bit antsy about the Koreas acting out a modern day Hatfields vs. McCoys just across the stream.

NATIONALIZATION: What's mine is mine and what's yours is mine as Argentina and Bolivia are grabbing Spain's toys like the bully kids at playgroup.

Socialism in, confidence-ism out.

THE CLIFF: Looking more and more like the US deadline headline story of the year.

GREECE: Government coming apart at the seams at the moment. Next up, feeling around in the dark for the exit…from the EMU, that is.

GOLD: Not dropping, not popping, just hopping about. Could be doing a double-Dutch with oil prices. Lemme check the playground tomorrow at recess and get back to you.

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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