HispanicBusiness

If there's one thing that keeps Birinyi up at night, it's Europe: He doesn't know how the debt crisis will end. Can the European Central Bank save the day? What happens if Greece exits the eurozone? Will it cause a domino effect and push bigger economies with high debt loads, such as Spain and Italy, to seek bailouts of their own?

"How it unfolds and when it unfolds, I am not even going to try to forecast," says Birinyi.

The fact that global stock markets swooned on July 20 after the Valencia region of Spain asked the government for financial assistance, only to rebound sharply a week later when the head of the ECB, Mario Draghi, said he would do "whatever it takes" to save the euro, shows how unpredictable the crisis is.

"I never thought I would have to worry about a region of Spain," says Birinyi.

"It is irresponsible to say that (a bad outcome in Europe) is priced into the market. It is not."

5. Policymakers: Fix it or make it worse?

The fate of markets for the remainder of the year will be dominated by three factors: "policy, policy and policy," says Ewen Cameron Watt, chief investment strategist for BlackRock Investment Institute.

A policy mistake in the USA, which faces key decisions on taxes and ways to bolster growth while also trimming the ballooning budget deficit, would be a market negative. A failure of European lawmakers and bankers to end the debt crisis and halt financial contagion would also be bearish, as would China's inability to manufacture a soft landing for its once-booming economy.

"Everything," says Cameron Watt, "is in the hands of the politicians."

Topping the U.S. policy agenda? Coming up with a tax policy fix that promotes economic growth and reduces uncertainty for businesses, says Andy Busch, a public policy strategist at BMO Capital Markets. The goal: come up with a long-term solution that will give businesses the confidence to invest and hire new workers.

"You can't have a government that operates on a quarter-to-quarter basis when businesses require confidence to go forward with a new plant that will take three years to build," Busch says.

6. China: Hard or soft landing?

China is the world's second-biggest economy. It's also been the engine of recovery since the financial crisis. A hard landing, or severe economic slowdown, is the last thing investors want to see.

The good news? China's attempts so far to reinvigorate its economy via two interest rate cuts appear to be working. In a recent report, the International Monetary Fund said China is headed toward a "soft landing." It expects the Chinese economy to grow 8.5% in 2013, up from 8% now. The IMF also stressed that, like the Fed and ECB, China is prepared to do what is necessary to keep its economy strong.

The fact the stimulus is working is a huge relief, says Paulsen.

"To me, the world can go on with a flat-lining Europe," he says. "But if the emerging world falls into recession, the global recovery is over."

Investors should keep the faith, says Stuart Freeman, chief equity strategist at Wells Fargo Advisors. Working in favor of investors, he says, are signs of stabilization in the housing market, lower gas prices and depressed stock valuations.

"Right now, the market is assuming that all of the negatives will all work against us," Freeman says. But he says the odds are that not every worst-case scenario will come to fruition.