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After a nine-day run in the

S&P 500

, the markets took a breather Monday to ponder all that changed for the better last week. The relatively clear re-election of George Bush, the easing of oil prices, and solid news on the economy from Friday's payrolls report all lifted some of the clouds of worry that previously held back equities.

After last week's more-than-3% rally, the benchmarks consolidated on Monday. The S&P closed 0.1% lower to 1164.89, the

Dow Jones Industrial Average

rose 4 points to 10.391.53, and the

Nasdaq Composite

was just about flat at 2039.25.

Elsewhere, the bond market stayed weak and nervous ahead of Wednesday's

Federal Reserve

meeting. The yield on the benchmark 10-year Treasury rose to 4.21%, up from 4.18% Friday and 4.07% on Thursday.

Jeffrey Saut, market strategist at Raymond James, looks for the equity market to cool off in the short term this week before trying to resume its upward track. The typical postelection "fling" is 6%, Saut wrote on Monday, and the Dow is up about that much from its Oct. 25 low.

More than 90% of stocks finished last week above their 10-day moving averages, and the

Lowry's Report

index of up vs. down volume hit 82, both indications of a short-term top, according to Saut. Regaining further upside momentum at a time when most investors already have anticipated a solid end-of-year rally may be tough if all the buying power is already exhausted.

"Whether such a rally is sustainable all the way into the New Year is suspect in our view since our proprietary overbought/oversold indicators are now

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overbought," Saut wrote. "Our notes show that the equity markets' first directional move following an election is usually wrong."

contributor Alan Farley

warned that investors buying at last week's prices might find they have "targets on their backs very soon." He sees another bullish leg in the S&P 500 hitting resistance between 1250 and 1300. "This follows my long-term prediction that the averages will hit new highs in 2005, but that advance may signal the end of the bull market," Farley wrote.

A similar warning comes from newsletter investing guru Charles Kirk. "All of the indicators I follow are as high or even higher than at each peak in the stock market this year," he wrote on Monday. "At a minimum, that means that the risk-reward balance favors more risk than reward at this stage, so be careful."

Bush Stocks and Skeptics

Among individual stocks, the Bush re-election rally continued in some corners on Monday, especially for-profit education stocks.

Congress will be working on a revision of the law governing student loans, the Higher Education Act, in 2005 and the Republicans in control of both chambers and the house at 1600 Pennsylvania Ave. unsurprisingly have a private-sector tilt to their view of how the law should be rewritten. Investors fretted that Democrats might have tightened eligibility restrictions for the profit-seeking schools or closed loopholes allowing higher rates.

Also lending the sector a hand on Monday was a little merger, privately held Knowledge Learning will buy

Kindercare Learning Centers


for almost $26 a share. Kindercare shares more than doubled to $24.75 while

Apollo Group


rose 3%,

Strayer Education

(STRA) - Get Strategic Education, Inc. Report

added 6% and

Corinthian Colleges

(COCO) - Get Vita Coco Company, Inc. Report

gained 5%.

Elsewhere, energy had a slow day thanks to the falling price of oil and


(HAL) - Get Halliburton Company Report

disclosure that company officials

may have paid bribes in Nigeria, according to investigators. Halliburton shares lost 1.4%,


(SLB) - Get Schlumberger NV Report

dropped 1.9% and

Baker Hughes


lost 3.4%. Crude futures settled down 52 cents, or 1% to $49.09.

There could be some bigger disappointments ahead if the market rally is truly dependent on Bush's second-term agenda coming to fruition, according to Lehman Brothers' Washington watcher, Kim Wallace. He's skeptical that Bush's planned overhaul of the tax code or Social Security will be enacted given the already high deficits. Even making temporary tax cuts permanent may be tough, he wrote Monday.

"Those actions would add at least $2.5 trillion to the deficit which he has promised to cut in half," Wallace wrote.

Frenchman Boosts the Buck

The dollar got thrown a life preserver from European Central Bank President Jean-Claude Trichet. The dollar dropped to an all-time low of over $1.29 per euro last week even as Trichet and fellow European bankers said nothing. On Monday, as the dollar approached the $1.30 level considered by technical analysts as a key support level, Trichet finally jumped into action, calling the dollar's fall "brutal" -- at least for European exporters competing with U.S. manufacturers -- and "not welcome."

That helped stabilize the dollar around $1.2914 down from a low of $1.2987 earlier. As noted in

Friday's column, even Friday's blockbuster October payrolls report was unable to stop the dollar's fall for more than a few minutes, and the outlook continues to be weak.

Monday's action was almost an exact replay of what happened in January when the dollar first approached the $1.29 record territory vs. the euro. In fact, Trichet recycled his "brutal" commentary from the February low.

Mellon Financial strategist Ian Gunner says the dollar could next fall to $1.34 vs. the euro once a close at or above $1.30 confirms the current weakness.

In keeping with TSC's editorial policy, Pressman doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send

your feedback.