What a Week: Bear Blast

Outside the exceptions, the broad market had no trouble drifting south Friday. Even so, most traders and portfolio managers are loath to call this a bear market just yet.

Charles Biderman, CEO and publisher of Trim Tabs Investment Research, remains bullish based on several liquidity-based factors. Insider selling is down 45% from a year ago, says Biderman, while take-home pay is up and corporate buybacks topped $20 billion in seven of the last eight weeks.

"All this is, is fear about the real estate market taking down the economy," says Biderman. "I think this is a tremendous buying opportunity."

Biderman, who has been bullish even through much of last spring's correction, says he'd change his mind about the stock market if, as in early 2001, he saw corporate buybacks and wage growth hit a wall as corporate insiders ratchet up their selling. "That presaged the last recession," he says. "We see nothing like that now."

Bear Stearns' Driscoll agrees that the fundamentals in the economy have not come apart. "We have to come up with a reason for every single wiggle and jiggle in the S&P 500 futures, and sometimes there's just a change in sentiment that doesn't have that much of a reason behind it," he says.

Sentiment has changed in the stock market, and it reflects the uncertainty. According to MarketVane, which measures sentiment in futures markets, the bullish consensus for stocks is at 66% -- "no-man's land," says Rich Ishida, chief technical analyst at MarketVane.

The peak was 74% in January, and the 24-month trough was 54% last June, which corresponded with a low point in the stock market. "If it is truly a bull market, the bullish consensus should get back to neutral [or the 54% area] before we feel really confident and rally once more."

So there may be more of a correction to go, particularly as the economic data continue to stream in inconsistently. This week, industrial production far outstripped expectations, while regional surveys of manufacturing activity in Philadelphia and New York were weak.

The producer and consumer price indices showed a large increase in headline inflation, but primarily due to energy- and food-price increases. Jobless claims reverted to early-February levels after a spike at the end of the month and in early March. But retail sales were markedly soft.

Some of it comes back to the weather, Joe Brusuelas told me in an interview on TheStreet.com TV. The post-holiday season is not typically strong, and February was particularly cold this year. Likewise, the market is in a seasonally quiet time after fourth-quarter earnings season, says Margaret Patel, portfolio manager at Pioneer Investments.

"The market can ebb and flow now," she says. "Absent news, and absent any major spillover from the subprime front, you're likely to see the market trade randomly in response to news that might not have any long-term significance." Also, technicians were looking for an 8% to 10% correction, and stocks aren't there yet. The Dow and the S&P are down about 5% from their late-February highs, while the Nasdaq has slid 6%. Watch out below.

1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting