Building on Wednesday's sharp rally and strong results from

Hewlett-Packard

(HPQ) - Get Report

after the bell, stock proxies bolted higher early Thursday and held the gains in afternoon trading.

As of 2 p.m. EDT, the

Dow Jones Industrial Average

was up 2.4% to 8829, the

S&P 500

was 2.1% higher at 933.20 and the

Nasdaq Composite

was up 3.1% to 1464.

The S&P 500 has eclipsed its Nov. 6 closing high of about 923, and the Comp had bested its Nov. 18 intraday high of 1425. If both indices close above those levels, the session will be considered a major technical victory for the bulls, especially if volume -- which was high in afternoon trading -- holds up. Similarly, the Philadelphia Stock Exchange Semiconductor Index breached its August high of 366 on an intraday basis, having traded as high as 366.36. However, the SOX has since pulled back a bit, lately up 7% to 361.90.

Meanwhile,

Microsoft

(MSFT) - Get Report

has traded as high as $57.76 intraday, once again challenging resistance at about $57.50. I've

written previously about the significance of a possible Microsoft breakout, and the market-cap giant's success or failure this time around could portend the market's next move.

All News Is Good News

In contrast to Wednesday's session, there was some fundamentally positive news for optimists to cite. Most notably, the index of leading economic indicators was unchanged in October after four straight months of decline, compared with expectations for a 0.1% drop. Elsewhere, the Philadelphia Fed's index of business conditions rose 6.1 in November, reversing a 13.1 decline in October and besting expectations for a flat reading. Additionally, weekly jobless claims were lower than forecast for a second-straight week.

Meanwhile, the market's proclivity to interpret bad news as good was evident again.

General Electric

(GE) - Get Report

best embodied the trend, lately up nearly 7% despite cutting its 2002 earnings forecast and announcing a $1.4 billion charge to shore up reserves at its Employers Reinsurance unit. GE did increase its dividend, and the bullish argument is that its lowered guidance already was factored into the stock.

So, basically, you have a situation in which good news is good for stocks, and bad news is good for stocks. In other words, nirvana for the bulls.

Certainly, the session is shaping up to be another significant defeat for bears, whose ranks shrunk in the latest

Investors Intelligence

survey. For the week ended Nov. 19, bearish sentiment fell to 24.7% from 28.1%,

II

reported Wednesday, although bullish sentiment also dipped, to 49.4% from 50.6%.

Further evidence of the lack of fear in the market comes from the CBOE Market Volatility Index, which was down another 4% to 27.46 at midday.

Additionally, that most prominent "safe haven," the 10-year Treasury, was getting hit hard again; of late, the price of the benchmark note was down 28/32 to 98 21/32, its yield rising to 41.17.

Meanwhile, a host of previously downtrodden and/or scandal-ridden names were among the session's most active gainers, including

Ford

(F) - Get Report

,

J.P. Morgan

(JPM) - Get Report

,

Tyco

(SYMBOL)

and

Sprint

(PCS)

.

Furthermore, a host of onetime highfliers in technology, which have more recently fallen on hard times, were bouncing sharply, including

PMC Sierra

(PMCS)

,

Broadcom

(BRCM)

,

Brocade

(BRCD)

,

Vitesse Semiconductor

(VTSS)

and

BEA Systems

(BEAS)

, as well as a slew of Internet-related names such as

Akamai Technologies

(AKAM) - Get Report

.

In the absence of fundamental developments, the gains for the tech names -- especially the ones with single-digit prices -- have the skeptics decrying the action as rampant speculation. As the presumably lower-quality names rise, the closer the rally's end must be, bears say.

The naysayers may very well prove correct, but not everyone is lamenting the action.

"We believe that we will continue to see the previously beaten-down sectors outperform and the previous outperforming sectors underperform," Rick Bensignor, chief technical analyst at Morgan Stanley, commented this morning.

Bensignor has been recommending high-beta, or more volatile, names in tech and telecom since the Oct. 9 bottom. He continues to believe they will outperform low-beta, or more defensive, groups such as basic materials and capital goods for the next six months or so.