It won't be long and influential traders on Wall Street will be leaving their trading posts for summer. These influential traders will be heading for places like Marthas Vineyard and Jersey Shores for their usual summer vacations. While away, volume on Wall Street will be irractic, and heavily dominated by hedge funds who like to create havoc while they can. In other words, "While the cats away, the mouse will play". If you ever wondered where "sell in May and go away" came from, now you know.
Tech companies normally do poorly during the summer months because school is out, and administrators who make buying decisions are usually on vacation too. In years past, companies like Apple Computer faired poorly because their largest market were schools. Today, of course, its a different story. Tech has been rallying of late due to short covering.
Trading was quiet today ahead of mid-quarter sales updates from Intel and Texas Instruments. Intel closed down 18 cents at 27.17. Texas Instruments fell 23 cents to 27.75. The Dow and Nasdaq inched higher as oil prices sold off and bond prices rose. Fed Chairman Alan Greenspan will be testifying to the Joint Economic Committee of Congress on Thursday, and traders are anxious to hear what he has to say.
Many are anticipating a pause in Fed policy in the late summer or early fall. The only way Uncle Alan can do this is if the dollar remains firm or goes higher. If the dollar resumes its downward trend, China has threatened to stop investing in US debt, and diversify its currency holds. If the Chinese begin selling their US holdings to diversify, the battle between Alan Greenspan and the bond market will come to an end. Longer term interest rates will rise, and the anticipated slowdown in the economy and real estate market will begin.
The above senario is not so much an "if" as it is a "when". I do not claim to know when the timing of when this issue will unfold, but I do know that China is holding a trump card. That being said, the next time you go to buy a shirt or a pair of pants, read the label. If it says made in China, know that you are putting the bullets in the gun that China has pointed at us. More dollars in their pockets buys more US debt.
DJIA: 10,467.03, up 6.06
S&P 500: 1197.51, up 1.49
Nasdaq Composite: 2075.80, up 4.30
