Rinse, Lather, Repeat
Today’s commentary will be less notable for what we say, and more for what we won’t say. We’re not going to pound the table, saying that we are bullish – although we do believe the path of least resistance remains upward. We won’t mention the low, low volume, the U.S. Open, Quadruple Witching Expiration, index re-balancings, oil prices, the Los Angeles Lakers (ha-ha) or even the Iraqi handover.
Instead, we will point out that summer officially starts on Monday.
While everyone is waiting for the June 30th date for the markets to start doing something (anything!), instead I would like to suggest that the action -- if that’s the right word for watching paint dry -- is more likely to begin in advance of that date. The significance of ‘the date’ has been discussed ad nauseum, and traders are well aware of all that will occur then. Hence, they will have positioned themselves well in front of the Iraq handoff, the Fed meeting, and Second Quarter’s end.
Indeed, recall the post-Iraqi War rally started a week before the invasion actually began. That’s a function of the market’s future discounting mechanism.
Speaking of future discounting, I am bored silly of all the Federal Reserve chatter. It is beyond ignorant, and has now reached the point of being utterly annoying.
So allow me to resolve the Federal Reserve issue once and for all:
The Fed will raise interest rates one-quarter point on June 30. They will release a statement saying the economy is evenly balanced, with growth good and inflation contained. Then they will go out making speeches congratulating themselves for a job well done. In August, they will do the exact same thing: ¼ point raise, balance is good, self-congratulatory speeches, blah, blah, blah.You heard it here first.
Rinse, Lather, Repeat.
This will occur again in November and then again in December, and pretty much every meeting for the rest of our lives – or until the next recession – whichever comes first.
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I don't understand all this talk about how the market hasn't been doing anything lately. Is everybody on Wall Street pouring money into MSFT and chanting a rain dance or something?
June has been a good month, there's been all sorts of action going on. All you have to do is look down the new highs list in IBD to see a bunch of breakouts. It's been the best month since at least March as far as I'm concerned.
The summer move up has already happened.
Posted by: Thomas Warfield | Jun 18, 2004 1:26:17 PM
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