Wall Street's Short Week: So Far, So Good

It's a short, thin week — there's no trading on Good Friday (to make sure it's good) and most of the big money is home minding the kids while they're off from school. Last week was brutal; even counting historic Thursday rallies, the NASDAQ lost 6.5 percent and the Dow 1 percent. And the next Fed meeting's more than a month away.

So what is Wall Street doing in a good mood?

Well, Amazon can still bellwether with the best of them, at least emotionally. After the bubble-all-over-its-face dot-com boldly preannounced Monday that it had lost less money (and sold more stuff) in the first quarter than anybody expected, suddenly anything looks possible. Could Motorola, or E*Trade (after the bell Tuesday) pleasantly surprise too? Could Yahoo (Wednesday?) tell us the web advertising market isn't quite a death sentence?

Funny how a few lonely speculators can get together and decide they're going to get in ahead of the big boys. Tuesday the markets opened high and hard on light volume — Dow up 190 and NASDAQ up 70 after about a half-hour of action — and hope was once again on the trading floor in at least measurable quantities.

You'd better hope they're not expecting to hear from the Fed.

That's what put a pillow under Friday's sell-off — the slightly starry-eyed hope that the uptick in unemployment to 4.3 percent would spur Greenspan to between-the-meetings action. Consumer confidence, after all, is all about having a job and expecting to keep it, and no matter how low 4.3 is on the historical scale, the trend is now officially an upward one. Here's how the market logic goes: short trading week, low volume, no economic reports (save inflation on Thursday, but that's not a real headliner these days) — a perfect time for the Fed to phone in a rate cut without appearing too responsive.

Don't bet on it. Greenspan, like everybody else, is still waiting to see where this economy is headed. That's one of the sources of the markets' frustration of late — that they're still mostly alone in their despair. Bad earnings reports, and investor despondency over same, have been coming too long to scare Greenspan now; what he really fears is fear itself, and until those consumers start closing their wallets, the Fed likely won't step in.

Monthly unemployment hits the papers in early May; if it ticks up again, that's the moment to start looking at Greenspan's trigger finger. Between now and then, look at retail sales, and consumer confidence especially.

The Street's flicker of hope has a couple of ways to get doused, starting with those same earnings reports that may or may not follow Amazon's cheery lead. Thursday's inflation number, if it's way, way up, could put those Fed rumors to bed with a thud. Then there's the fact of the good mood itself — a few rallies between now and the week's end could make the mood on Good Friday too good.

With a three-day weekend to think about it, the big money could wind up looking at four thin-but-happy rallies and decide that emergency Fed intervention really is a fantasy. Putting everybody back in a bad mood for Easter Monday.

Is it any wonder the bottom is so hard to find?