Good News for Bulls! There's Plenty to Worry About

Still, a few cracks in the rally's armor have emerged in recent days, in addition to long-term concerns about America's deficits and general societal decay:

• Downside surprises: August durable goods, and new and existing homes sales figures were weaker than expected, as were Research In Motion's results and guidance.
• Lag This: For all the talk about how employment is a "lagging indicator", the reality is people can't spend much if they don't have a job and will spend less if they're worried about job security. Since consumer spending still accounts for about two-thirds of economic activity, it's hard to see how the rebound will be V-shaped or housing can mount a sustained recovery until the job situation improves. (And, yes, consumer sentiment is on the rise but that's famously volatile gauge and highly correlated to the stock market.)
• Valuations: Stocks may be reasonable, even attractive, based on last year's trough earnings (trailing P/E) but they are now overvalued again based on Robert Shiller's long-term cyclically adjusted P/E ratio, which has a very good track record. 
• Commodity Slippage: Crude headed into Friday's session at it s lowest level since July 29, while gold was recently trading around $990 after having once again failed to sustain a move above the $1000 per ounce level. This could be mere profit taking or a sign the "reflation trade" is hitting a snag as the dollar gets a reprieve from its relentless selloff.
• Rising Supply: Thursday was the biggest day for IPOs in 18 months, according to The WSJ. On Friday, Shanda Games raised over $1 billion as its IPO priced above expectations. Meanwhile, selling by insiders like Toll Brother's CEO Bob Toll remains at very high levels.
• Bad Banks: Japan's Nomura Holdings tumbled 16% overnight after announcing plans to raise $5.6 billion. There are fears banks worldwide will need to raise more capital to meet new regulatory standards, especially given expectations for another big round of loan losses in the months ahead.
• Sum of all Fears: Geopolitics is always a wildcard for investors but the revelations of Iran's secret nuclear facilities, and tough rhetoric at the U.N. from President Obama and Israeli PM Benjamin Netanyahu, raises the odds of military action against the rogue regime.

Of course, if the market "climbs a wall of worry," the fact there's so much to worry about is probably good news for the bulls, who have so far laughed in the face of September's cruel history.