Wall Street is marking its calendar for one of the biggest dates it's faced this year and perhaps even longer - and until it arrives investors are likely to act more like sheep than either bulls or bears.
On the last day of June, the United States is set for the tense handover of power in Iraq, an event fraught with uncertainty as insurgents try to undermine the effort.
If that's not enough to keep investors wary, it's also the day on which the Federal Reserve will likely boost interest rates for the first time in four years.
"The uncertainty has people unnerved," said Brett Mitstifer, senior portfolio manager at ValueLine Asset Management, "It's a very, very mixed market without much leadership, and that's likely to continue that way until June 30."
The rise of oil prices to historic highs has also dampened enthusiasm for equities. While some of the rise in energy prices is linked to demand, analysts also see a "risk premium" built in because of the Iraq war. The build-up to the June 30 power handover, and concerns about the country's fragile oil supply, has pushed crude prices to more than $40 a barrel. Analysts remain uncertain, though, whether a major pullback could take place if tensions ease.
As a result, trading has slowed as some investors move to the sidelines, and those remaining have been buying only the most defensive, cautious stocks they can find. Meanwhile, more speculative stocks are being dumped from portfolios.
The most economically sensitive stocks, the heavy mining and manufacturing concerns, among the biggest gainers in the past year, have started to slip. In the past month, Alcoa fell 11 per cent and Caterpillar dropped 10 per cent, after being among the Dow's leaders last year.
In the same period, the Dow's more defensive "stable demand" stocks gained ground. After lagging the average over the past year, Johnson & Johnson is up three per cent, and Procter & Gamble Co. up four per cent.
The shift towards more conservative stocks began in late January when the Nasdaq reached its peak and started to decline. It's now down about 11 per cent from its year's best level at 2,153.83 on January 26. The Dow Industrials began their descent almost a month later, but the decline has been less severe, with a seven per cent pullback.
"Small-caps typically outperform in the early stages of economic and market recoveries, and that was particularly true this time," said Jack Laporte of T. Row Price's New Horizons Fund in a newsletter. Blue chips historically have traded at a premium to small-cap stocks, but they lost their luster as smaller technology and growth stocks rallied in recent years.
The stock market tends to value bigger companies more highly as interest rates rise. In part, it's because they borrow less, so interest payments don't create a drag on their cash flows. It's creating a full-fledged "flight to quality" in the market now.
For now, investors are focusing on the companies sitting on large amounts of cash, now at historically high levels. The Standard and Poor Industrials had a combined $539 billion in cash at the end of March, twice its level of 1999. That reflects increased cost-cutting and a reluctance to invest in new staff or projects.
This flight to quality, cash-rich companies is likely to continue as investors look for safe havens ahead of the big events next month, said Rick Meckler, president of investment firm LibertyView Capital Management of Jersey City.
But after any rate hike is absorbed, if the market can become less worried about Iraq, investors will probably grow less conservative, shifting back into stocks that could benefit from higher earnings. Even financial stocks, the market's pariahs in this period of interest rate paranoia, could see a rebound.
"It's not a bad time, economically. Cyclicals historically are tied to GDP growth. We are getting growth and earnings will keep growing," said Mr Meckler.
But fund managers have been hyperactive about dumping out stocks at the first sign of trouble, Mr Meckler said. "We're in more of a trading market and less of a buy-and-hold market. So we're seeing some sectors getting hit in a hurry."
The caution could continue well into summer, Mr Meckler said, since the period will also include the political conventions and the Olympic Games in Athens, which will be surrounded by heightened security concerns.
But just because the market is now going through a quiet period of slow trading ahead of the summer, it doesn't mean the waters will remain completely calm. Indeed, with volume as light as it has been, volatility can increase.
"We'll see pullbacks, rallies, all kinds of stuff - choppy activity, both up and down," said Mr Mitstifer. But the moves aren't likely to be sustained for more than a few days until after the decisive events of next month.