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Stocks Likely to Bob and Weave for Another Two Weeks

By

Government on edge, markets on hedge. It's mad season once again!

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Why do we need to go through market turmoil every September and October? It is truly the stock market's mad season, and whatever the reason, it's not likely to change unless some world leader manages to add a month to the calendar -- and considering that the best Julius Caesar and Caesar Augustus Caesar were able to do was to add a day and change a name, a new month ain't happening.

So we likely have another two weeks to watch US stocks -- via the Dow (INDEXDJX:.DJI), S&P (INDEXSP:.INX), and Nasdaq (INDEXNASDAQ:.IXIC) -- bob and weave their way into November, unless we actually get a debt default (unlikely, and hopefully a moot point by the time you read this) because then we will get perhaps get the maddest mad season we have seen in a while.

Back in Fundamentalville, earnings season has kicked in, and so far, so... meh. It sure would be nice to get a capital spending, hiring, and retail spending cycle going. All it would take is some clarity and confidence in leadership, far and wide. Unfortunately, that well is currently running a bit dry.

So here we sit at one of those crisis moments again, waiting for yet another "yay" or "nay" vote to take place in the hallowed (read: hollowed) halls of government. I'm pretty confident Mr. Market is rooting for "yay."

As the Wall zen master says, "We'll see..."

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: Rapidly becoming the economic driver of last resort.

UNEMPLOYMENT: All we need is a little confidence in our leadership, and hiring will begin in earnest. That genuinely brought a tear to my eye.

US ECONOMY: Ready for lift off... or collapse. Washington, DC, you make the call.

INVESTOR SENTIMENT: Disgusted. And rightfully so.

HOUSING CRISIS: "So long, farewell, auf wiedersehen, adieu..." No joke, last week on the Wall!

EUROPEAN ECONOMY: "Everything's fine here. Now stop bidding up our overpriced currency!" Careful what you wish for...

VOLATILITY: Let's hope that the debt ceiling tornado peters out before spinning us into the stratosphere. Auntie Em? Auntie Em!?

HIGH-FREQUENCY TRADING:
Lloyd: What are you going as for Halloween?
HAL: Congress.

CHINA: Housing bubble -- game back on!

GLOBAL ECONOMY: Whistling a happier tune, but take a wrong turn and we're back to whistling past the graveyard again.

DATA DELUGE: All those economic numbers we usually get from the government didn't disappear; they're just hanging out at the $5 blackjack table in Atlantic City until we open things back up.

BONDS: Staying cool in the pocket until taper talk starts up again.

EARNINGS SEASON: So far, so... ignored.

CONGRESS: Someone overnight them a copy of Schoolhouse Rock, stat!

CONSUMER CONFIDENCE: "Gimme one reason to stay here, and I'll turn right back around..."

RETAIL SPENDING: The scariest thing about Halloween this year may be the lack of spending on this, the second biggest retail holiday of the year.

DEBT CEILING: Here goes... everything "in this Mad Season."

SEQUESTER II: If past is prologue...

EMERGING MARKETS: If America keeps up this level of anti-economic behavior, it will join the ranks of the high-growth emerging market countries. Getting there won't be fun, though.

US GOVERNMENT SHUTDOWN: Has it been lost on anyone that even the highly dysfunctional Italian government hasn't shut down like the US government has?

FED CHAIR: Ms. Yellen, you still gotta get confirmed. Welcome to the age of everything/everyone is a bargaining chip.

ITALY: Clearly has chosen corruption over dysfunction. They may have a point.


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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No positions in stocks mentioned.
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