A second day of retreating oil prices allowed the market to put in its first back-to-back session of gains since early March. And the calls for an oversold rally are getting louder.

The

Dow Jones Industrial Average

gained 37.32 points, or 0.36%, to 10,458.46. The

S&P 500

rose 5.27 points, or 0.45%, to 1181.39; and the

Nasdaq

gained 8.25 points, or 0.41%, to 1999.32, having briefly regained the 2000 level earlier in the session. Breadth was positive, with gainers outpacing decliners 8 to 7. There were 1.85 billion shares traded on the

NYSE

and 1.65 billion on the Nasdaq.

As has often been the case lately, stocks moved in opposition to crude oil, which closed down 97 cents at $56.04 a barrel, more than $2 below Monday's intraday high. Gasoline prices also fell, down more than 3 cents to $1.69 a gallon.

Alan Greenspan, speaking to the National Petrochemical and Refiners Association, did his share to try to weigh down energy prices. In so many words, the chairman said the supply-and-demand picture is out of whack, noting forward energy prices have started rising faster than spot prices. Such a phenomenon could promote a building of inventories and the replenishment of an energy "buffer," he said, which could help assuage "the current price frenzy" in the oil market.

This was yet another Greenspan phrase that may go down in history along with "irrational exuberance" to describe the 1990s stock bubble and his more recent "conundrum" description of the phenomenon of long-term market rates falling despite multiple Fed rate hikes.

Although oil futures apparently moved little on the speech, it was enough of a symbolic (if only short-term) counterweight to Goldman Sachs' forecasting last week that oil is in a "super spike" period that may lead the barrel to over $100.

The benchmark 10-year Treasury note fell 4/32 and its yield rose to 4.47%, with bond players apparently reading Greenspan's words as indicating little concern over oil's impact on growth. The dollar, meanwhile, rose against the euro, and to another five-month high against the yen.

Upping the Ante

Tuesday's upbeat performance, even if modest, makes

calls for an April rally look more plausible. More importantly, perhaps, Paul Desmond of Lowry's Research, is joining in the crowd of gurus looking for a rebound.

"There has been a short-term correction, which we think we've now completed, and we'll now resume the bull market and move towards new highs," Desmond says.

As discussed here Monday, Don Hays and Merrill Lynch's Richard McCabe are expecting an April rally that could take us back to March highs. But both veteran market-watchers believe any near-term advance may be followed by subsequent weakness, where the market would make new lows for the year.

Desmond, on the other hand, is not expecting any market top or "final hurrah" in April. Instead, he expects the post-2002 bull market to reach a top in late 2005, sometime between August and October. "We still have six or seven months, which leaves room for very substantial gains," Desmond says, adding that he expects 2006 to be a down year.

Another difference with Desmond is that he's not basing his high and low forecasts on the major indices, which are heavily influenced by market capitalization. The 500 stocks of the S&P 500 on an equal-weighted basis still had a positive performance for the first quarter, while the cap-weighted index dipped 2.5%, he notes.

Blue chips have not been performing well, Desmond says, because they're not flexible enough to find new growth opportunities. Like many others, he believes that success in the post-2002 market is a matter of picking the right stocks.

Beyond technical calls by market gurus, there appear to be some fundamental reasons to believe that the market could see an April rebound.

Money managers still have a lot of cash in their hands after remaining uncommitted in the February rally, according to Bank of America research. So far this year, mutual funds have put only $400 million of the $4.1 billion of new cash that they've received to work in the market. At the same time, recent trends show increasing outflows from emerging-market equity funds as the dollar has continued to strengthen lately.

For a more bearish view, Robert Pavlik, portfolio manager at Oaktree Asset Management, says "there are lots of land mines" in the current market, i.e., interest rates and soaring oil prices."

"Earnings season may pull us out of it. If companies are more positive in their earnings guidance, this could be a catalyst in near term," Pavlik says. "

But the impact of oil and higher interest rates is what people will be focusing on in those earnings release and this will have major market implications going forward."

Movers and Shakers

The pharmaceutical sector paced the advance Tuesday, as investors chose to focus on the long-term positive promise in a profit warning from

Pfizer

(PFE) - Get Report

.

Sanofi-Aventis

(SNY) - Get Report

also surged higher after Prudential initiated coverage of the stock with an overweight rating.

Even a Moody's downgrade of

General Motors'

(GM) - Get Report

credit rating could not shave the market's positive sentiment, which remained fueled by the declining price of oil futures.

Boston Scientific

(BSX) - Get Report

gained 4.8% to $30.71 after the Food and Drug Administration said patients implanted with the drug-eluting Taxus Express2 and the bare metal Express2 stents could now undergo magnetic-resonance imaging immediately after surgery. It's the first such approval and represents something of an advantage over rival

Johnson & Johnson

(JNJ) - Get Report

.

Google

(GOOG) - Get Report

rose 1.8% to $188.57 after Lehman Brothers raised the shares to overweight from equal weight, citing strong business conditions in the paid-search space. Lehman, which also cited overseas penetration, said the current price of about $190 represents an attractive entry point for the stock.

On the flip side, a number of tech stocks were hit after issuing profit warnings on the eve of the first-quarter earnings season, including

RSA Security

(RSAS)

, which fell 29%, and

Mentor Graphics

(MENT)

, which plummeted 26.5%.

In keeping with TSC's editorial policy, Godt 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

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