US Markets Sound the All-Clear Signal

By Lloyd Khaner  OCT 23, 2013 1:00 PM

The global markets, too, are whistling a happier tune. At least for now.

 


Another crisis averted, pats on the backs all around in Washington, DC, as our elected officials have saved the ship once again. Now if they would just stop punching holes in America’s hull every few months we could really set sail for better times. We can hope.
 
Odd thing happened during the latest crisis du jour in the US, as the Dow (INDEXDJX:.DJI), S&P (INDEXSP:.INX), and Nasdaq (INDEXNASDAQ:.IXIC) didn’t get rocked and roiled the way they have in the past. The markets decided that the Washington legislators were just crying wolf, and they were right. Let’s hope the elected few in DC don’t look to prove a point next time; again, more hoping.
 
Back to fundamentals -- yes, they still do matter to stocks. The earnings season is in full swing and so far, so mediocre. And in a time of low interest rates, low headline inflation, low expectations, and low number of other places to put your money in hopes of getting a return, equities win. There’s that word hope again.
 
For now the markets are British, keeping calm and carrying on. Will it continue?

We can hope.

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.
 


Lloyd's Wall of Worry 

QE: I’m waiting for the markets to create a taper derivative to bet on. Sigh.
 
UNEMPLOYMENT: “All I need is a miracle, all I need is you…” to add 200,000 plus jobs per month.
 
US ECONOMY: Dreaming of 3%+ US GDP growth in 2014. I said dreaming.
 
INVESTOR SENTIMENT: Greed, anyone?
 
EUROPEAN ECONOMY: “Everything’s fine here. Now stop bidding up our overpriced currency!”  Careful what you wish for….
 
VOLATILITY: The sky-is-falling crowd is screaming for it; the rest of us, not so much.
 
HIGH FREQUENCY TRADING:
Lloyd: What are you going as for Halloween?
HAL:  Congress.
 
CHINA: Hints of inflation shake and shimmy their money markets. Canary?
 
GLOBAL ECONOMY: Whistling a happier tune, but take a wrong turn and we’re back to whistling past the graveyard again.
 
DATA DELUGE: Can yesterday’s numbers impact today’s market? We’ll see.
 
BONDS: Staying cool in the pocket until taper talk starts up again.
 
EARNINGS SEASON: Halfway home. Hope we don’t get lost.
 
CONGRESS: Its latest crisis upset the apple cart but didn’t really move the markets. Perhaps this crying wolf’s tears have dried up?
 
CONSUMER CONFIDENCE: "Gimme one reason to stay here, and I’ll turn right back around..."
 
RETAIL SPENDING: “Let it snow, let it snow, let it snow…” Sure could use some cold weather for Retail Land.
 
DEBT CEILING: The near miss in the US? That’s gonna leave a mark.
 
SEQUESTER II: If past is prologue....
 
EMERGING MARKETS: America keeps up this level of anti-economic behavior and it will join the ranks of the high-growth emerging market countries. Getting there won’t be fun, though.
 
US GOVERNMENT SHUTDOWN: Gone but not forgotten.
 
FED CHAIR ELECT: Ms. Yellen, you still gotta get confirmed. Welcome to the age of Everything and Everyone Is a Bargaining Chip.

ITALY: Clearly has chosen corruption over dysfunction. It 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.

LK/KCLP Ownership Disclosure: SPY, DIA, QQQ, GLD, TBF, IWM

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