The stock market is betraying a new vulnerability -- to good news.

The least murmur of corporate optimism from the tech sector in recent days has been enough to send the major averages skyward. Stocks, in particular tech issues, were lifted in consecutive sessions after

Cisco

(CSCO) - Get Report

and

Dell

(DELL) - Get Report

did nothing more than reaffirm earnings guidance. And the pronouncements hardly came in a chorus -- plenty of other companies, including

Nortel

(NT)

,

Compaq

(CPQ)

and

Corning

(GLW) - Get Report

, were busy this week detailing sob stories.

On Thursday, the

Nasdaq again finished higher, although the

Dow Jones Industrial Average and the

S&P500 were victimized by a

late-day selloff to end the session lower.

"There's a nervous bullishness right now," according to Kent Engelke, capital markets strategist at Anderson & Strudwick, who said recent news, including President Bush's proposal of a $75 billion economic stimulus package, has helped investors focus on a recovery. "You're kicked so far down that with any sort of positive news, you would just celebrate," he said, even though headlines, like Friday's

employment report, could "get much uglier."

While Engelke believes investors are starting to focus on an economic turnaround, he said the market could quickly reverse course. "The moment I feel the bullishness is beginning to evaporate," he said, "I'll sell in a heartbeat."

Cisco, which rallied 22% on Wednesday, told analysts at a Goldman Sachs conference that it's "very comfortable" with Wall Street's fiscal first-quarter estimates. A day later, PC-maker Dell reaffirmed its previous guidance for the third quarter, pointing to the "potency and efficiency" of its method of selling computers directly to consumers. Shares of Cisco closed up 3.4% at $14.42 Thursday, while Dell rose 8.2% to $22.32.

Meanwhile, the latest weekly jobless report showed that the number of Americans filing initial claims shot up 71,000 to 528,000 in the week ended Sept. 29, the highest level since July 1992. Investors, at least those aching for a tech rally, largely ignored that news and focused instead on the perceived positives.

On Wednesday, the Nasdaq spiked 5.9%, its biggest percentage gain since April, while the Dow rose above 9000 for the first time since the Sept. 11 terrorist attacks. Thursday, the Nasdaq built on the prior session's gains by adding more than 1% to settle just short of 1600. The Nasdaq is up 12.3% since Sept. 21, outperforming the other major equity averages.

Hello, Goodbye

"There are still valuation issues and veils of uncertainty about this war on terrorism," said Paul Cherney, a market analyst at S&P MarketScope. Cherney pointed out that both Cisco and Dell were merely reaffirming the guidance they've given before. But because the market, especially tech stocks, was "very oversold," any morsel of positive news was enough to provoke bargain hunters, he said.

More importantly, he said, were technical reasons for the rally. An "awful lot of people on the sell side" were no longer holding stocks they wanted to unload, he said, and this "has reduced resistance for the ride back up."

Short-covering probably was responsible for some of the market's gains, Cherney said. Recent data show short interest on Nasdaq stocks has risen to record levels. As a sign that short bets have soured, many beleaguered and fundamentally iffy stocks posted impressive gains over the past two days:

Juniper

(JNPR) - Get Report

has soared 39.2% since its Tuesday close of $9.53;

Siebel Systems

(SEBL)

has gained 24.9% from $15.06; and

Veritas

(VRTS) - Get Report

has risen 23.6% from $19.90.

In contrast, stocks that were

last week's safe havens have lagged.

Merck

(MRK) - Get Report

is down almost 2% since Tuesday, and tobacco giant

Philip Morris

(MO) - Get Report

has slipped 1%.

"As far as tech goes, I can only consider what's going on now a short-term phenomenon," said Cherney. The smarter money, he said, is going to traditional cyclical stocks like

Boeing

(BA) - Get Report

and

Caterpillar

(CAT) - Get Report

, as well as certain financial stocks that tend to benefit when the

Federal Reserve is aggressively cutting interest rates.

The Nasdaq's run-up is new hope for portfolios that fell apart during the last 18 months. But, considering the continuing concerns about valuations and the prospects of war, tech stocks' latest rally could easily end up punishing overly optimistic investors. Earnings season has barely kicked off, and there's still plenty of room for disappointment.