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Have Traders Called It Quits on Irrational Stock Market?

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Where has all the volume gone? It could be that only investors are left buying and selling stocks in this market.

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Let's start with the good news since it's been in rather short supply as of late in Marketland. The Dow (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX) and Nasdaq (INDEXNASDAQ:.IXIC) bounced back from their latest NCE (Near Correction Experience), leaving the first two close to their all-time highs and the third back in mountain-climbing mode. That said, where has all the volume gone?
 
Now, don't go all HFT on me. The volume HFT supplies is as fleeting as the six-pack abs I had during the summer of my seventeenth year and even harder to detect. It could be that the traders have had it with the irrational market volatility and left the electronic building or -- ready for this? -- it could be that only investors are left buying and selling stocks in the market for now. It has been a while, so let me throw a refresher definition at you just in case I lost you. Invest: in-'vest, transitive verb -- to commit capital with the expectation of financial return (Investopedia to the paraphrased rescue). If this is the case and we are heading into period of investor-dominated markets, hang on -- this might just get boring.
 
In the meantime, we are smack-dab in the middle of earnings season, and what's been dubbed "Super Macro Day" is coming at us next Wednesday, April 30. The super day comes replete with Bank of Japan policy decisions regarding interest rates, stimulus, inflation, and growth; the eurozone dishes on its Consumer Price Index while the US tosses us a first-quarter GDP read and the least-surprising Federal Reserve decision in forever. Therefore, while volume may stay low, volatility may not. Investing -- it never gets easy; it just gets different.

Vive la différence!

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.




RUSSIA: Pushing west to get east. East Ukraine, that is.

UKRAINE: "Mama said there'd be days like this."
 
US FED:
Will an economic slowdown slow down the pace of bond buying by the Fed?
 
EARNINGS SEASON:
This is the big week to find out if the fire hose is set on "stun."
 
VOLUME:
Anybody out there investing? "Where has all the volume gone...?"

QE: "Sweet dreams are made of this...." Does that mean a nightmare is in the future?

UNEMPLOYMENT: Whether it's cyclical (moves up and down with the economy) or structural (permanent), it's still in actual double-digits in Europe.
 
INVESTOR SENTIMENT: Thinking about upping its shrink visit to twice a week.
 
EUROPEAN ECONOMY: Quietly, very quietly -- like at that special, only-dogs-can-hear-it level -- getting better.
 
HIGH-FREQUENCY TRADING:
Lloyd: Say good night, Gracie.
HAL: Nah, still getting my freak on.
Lloyd: Good night, and good luck.
HAL: Dude, I stillz got skillz.
Lloyd: The Fat Lady isn't just singing, she's belting out "Rigoletto."
 
CHINA: Its economy is growing 7%-plus and the rest of the world is giving it a hard time!? To wit, the world replies, "Mos' def."
 
RETAIL SALES: I'm starting to think people are going to wear sweaters to the beach this summer.
 
US ECONOMY: We don't need no stinkin' steroids! Or do we?
 
ECB: Keeping two hands on the rudder amidst a growing hailstorm of financial ack-ack criticism.  
 
MOMENTUM STOCKS:
They won't go down without a fight, though clearly that first left hook to the jaw rattled them.
 
EMERGING MARKETS: The only thing emerging right now is money coming out of these markets and into anything else.
 
VOLATILITY: Once again, all quiet (read: too quiet) on the equity front.
 
PMIs: Put on your sunglasses for Big Flash Day on 4/23 re: the US, China, and the EU.


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.
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Positions: DIA, SPY, GLD, GDX, GDXJ, TBF, EUO
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