Looks Like an Indian Summer on Wall Street

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Just before the spiritual closing bell of summer, in what's traditionally one of the slowest weeks of the trading year, Wall Street had a big day that might be a big clue to what the next season holds.

Surprising analysts with one of the biggest trading volumes of the year, Thursday saw healthy rallies on all three indexes: 122 points for the Dow, 102 for NASDAQ, 15 for the S&P. Friday followed with more good stuff: the Dow ended up 24 and the NASDAQ was ahead by 28. Good days to help cap off a very good month (except for Ford), with the Dow picking up 7 percent in August and NASDAQ gaining 11 percent and finally breaking into positive territory for the year.

But the heavy lifting was done by a few. JP Morgan, a Dow component, shot up 16 points on speculation that they're due for a merger (word is the old-school suits over there will hold out for an extremely dignified deal). Intel, Cisco Systems and Oracle drove NASDAQ, basically because they're the best bets in a rather shaky tech sector, and investors like to have their portfolios nice and fat before the long weekend.

The ghost of Alan Greenspan even chipped in, maybe for the last time before November — housing starts plummeted 7.5 percent in July, way more than expected, and two other inflation measures fell similarly. Psychologically, investors have to be convinced now that Greenspan is on the sidelines — and that clears the way for an upbeat fall season.

Which brings us to the biggest storm cloud out there: The economy, is she slowing too fast? Formerly high-flying retailers — Gap, J.C. Penney, Target, Home Depot, and Wal-Mart (yes, Wal-Mart) — have been getting downgraded by analysts and dumped by investors, as profit warning after profit warning comes out. When this consumer-driven economy cools, it's the malls that feel the pain first.

But market-wide, it's not a real fear yet. Is Uncle Alan running us aground now, after so many textbook turns in his years at the helm? Nah. Greenspan gets the benefit of the doubt, for a while. But they're a real jittery crowd.

All in all, in fact, things are looking up. The Fed is on the sidelines. Election years are historically upbeat ones on Wall Street. Sure, the tech sector's still a minefield, but the usual safe plays, like Thursday's trio, are still reliable.

There was even some karmic good news Thursday — the feds caught the alleged Emulex scammer after only six days. (Apparently he'd shorted the stock in legit trading and was down 100K, so he came up with the fake press release to cool it off.)

So the way ahead is clear of monsters — the market seems decipherable again. Looks like the weather on Wall Street's going to stay warm awhile yet.