In the wake of today's not-as-strong-as-people-feared February

jobs report


Morgan Stanley Dean Witter

chief U.S. investment strategist Peter Canelo is upping the stock portion of his firm's U.S. balanced portfolio.

"We're going to go from 65% stocks, 20% bonds and 15% cash to 70% stocks, 15% bonds and 15% cash," said Canelo, who said the market should be able to move ahead now that the bond market appears to have found its range. "I think that gives the market room to shoot for 10,000," he said.

Canelo compares the current period to the stock markets of 1987 and 1994, where stocks would tread water while the bond market declined, and then shoot higher once the bonds stopped dropping. "We're kind of hoping that bonds get boring for a while," he said.

Canelo last changed his allocation model Jan. 12, when he moved 5% out of stocks and into cash. At that time he was concerned about the weak dollar, rising bond yields and the recent speculative action in Internet issues.