Market Summary

The NASDAQ Composite was only one of the major indexes to make progress this week as it gained 0.59% while the DJI was setback by 0.51% and the S&P 500 gave up 0.02%. Trading was lighter than average as the markets were closed Thursday and were open only until 1pm on Friday. Under these conditions, it is difficult to draw any conclusions about the underlying direction of the markets, although a period of consolidation was to be expected given the recent gains. The indexes lost ground on Friday due to a drop in the dollar which re-ignited fears of inflation and a possible tightening by the Federal Reserve. A lower dollar theoretically increases the cost of imports, thereby fueling inflation. This is a vicious circle because the while the trade-gap with the rest of the world continues to widen, the dollar will continue to fall. A dollar 'plunge' is possible and that's what seemed to be on the minds of investor's on Friday as the dollar fell sharply against the currencies of our major trading partners. Economists agree that this cannot continue indefinitely, but disagree about how the situation will resolve itself. On Friday, Morgan Stanley published an optimistic assessment that a soft-landing would be the outcome for the US, although one has to be a little skeptical as all those associated with Wall Street have an interest in talking up the prospects for equities. Meanwhile, there will be a plethora of data available to the markets next week, including this weekend's holiday sales data, and we may see the current consolidation turn more negative. Bloomberg provides a useful economic calendar which includes consensus estimates for the major data.

The commentary this week is shorter than usual due to the holidays.

No Tip This Week

There is no tip this week due to the holiday..

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