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SAN FRANCISCO -- The market continues to do what it does best -- confound expectations.


April 17, you'll recall, the market was supposed to crash. Instead, it rallied with vigor. That advance, and one the following day, sparked hopes the

Nasdaq Composite

would continue higher unabated. Instead, it finished last week on a downbeat.

Coming into Tuesday's action, Monday's final-hour bounce seemed less significant than the more-than 4% decline suffered by the Comp.

Monday night, I discussed the concerns regarding the valuations of many tech bellwethers.

Even as the market moved higher Tuesday morning, many questioned whether the advance would last through the session. So, of course, the market just kept moving steadily higher

Tuesday, leaving the Comp up 228.75, or 6.6%, the


higher by 2% and the

S&P 500

up over 3.3%.

And (

take that, TaskMaster

) it was tech stalwarts such as

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Sun Microsystems

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that paced the gains; the

Nasdaq 100

rose a whopping 8%.

My only solace is that Wall Street professionals were equally shocked and perplexed by the action.

"The way this market trades -- it's so emotional," said one trader. "It seems we overreact in both directions. It's confusing to interpret. I have a difficult time having anything meaningful to say."

Hugh Johnson, chief investment officer at

First Albany

, did have something (hopefully) meaningful to add, although he, too, was taken aback by the extent of the tech-led advance.

"I'm surprised and disappointed," he said. "We'd made considerable progress in eliminating the significant overvaluation in tech,

but last week and this week it's as though we've restarted the speculation. Tech stocks have moved up again to levels where they're arguably overvalued, bordering on speculative."

The silver lining for Johnson is that First Albany has been and remains overweight tech with big holdings in familiar favorites such as Sun,


(CSCO) - Get Cisco Systems, Inc. Report

, and


(ORCL) - Get Oracle Corporation Report


In fact, Johnson had planned to reduce holdings in each of those three names last week, if only because they'd risen to become too great a percentage of First Albany's roughly $600 million in assets. But he did not, and now has the opportunity to do so at significantly higher levels.

Without lamenting the "fattening" of the portfolio that's transpired (which would be silly), the investment chief expressed concern the rekindling of speculation has decreased the odds for an "orderly advance." Unyielding volatility is good for (adept) traders, he noted, but makes it "challenging to make sensible decisions."

In that light, First Albany remains overweight tech but is also overweight utilities, consumer cyclicals and energy, and is eyeing similar exposure to heath care.

Those groups admittedly make "strange bedfellows," reflecting the fact the market is "confusing as hell" right now, Johnson said.

Unwavering and Unbowed

Conversely, Jeffery Applegate, chief investment strategist at

Lehman Brothers

, has never seemed confused -- at least about his market outlook.

Overweight tech since 1993, Applegate remains so. He is decidedly bullish on prospects for the sector, owing largely to the strong global demand for tech products and the group's higher-than-average earnings growth.

"If you've been overweight tech, you've been hammered; we're a prime example of that," the strategist said. But "I would not be a seller of tech at this point. I'd be a buyer."

He believes the Comp hit its trough on April 14 and said simply of today's advance: "You can't keep a good market down."

Unlike some strategists, Applegate does more than just theorize. The roughly $300 million in client money he runs for Lehman features big investments in the "usual suspects" in tech, including Oracle, Sun, Yahoo!,

Applied Materials

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America Online






JDS Uniphase


, and



Applegate hasn't recently added to those core positions, save for


(MSFT) - Get Microsoft Corporation Report

, which he bought more of after Monday's shellacking. But he's a willing buyer for anyone looking to sell into the Comp's most recent strength.

The beauty is, it just takes two to make a market -- and to make a thing go right.

Fair Warning

Just a quick heads-up that the politicians have taken it upon themselves again to serve (and protect?) the investing public.

Specifically, I refer to the hearings on "competition and transparency in the financial marketplace" scheduled for Wednesday morning before a subcommittee of the

Senate Banking Committee


The "star" witness at tomorrow's hearing is Richard Grasso, chairman and CEO of the

New York Stock Exchange


Grasso is expected to discuss the market structure report issued by the Big Board on

April 6, according to committee spokeswoman Christi Harlan.

Notable in that NYSE report was the exchange's rejection of a consolidated limit order book, or CLOB. The issue is expected to be the focus of the hearings, Harlan said, although related structural issues such as decimalization also may be discussed.

Others scheduled to appear include Kenneth Pasternak, CEO of


(likely to take strong exception to the NYSE's stance on CLOB), Anthony Cecin, head of equity trading at

US Bancorp Piper Jaffray

(and a favorite source of this column), David Colker, president and COO of the

Cincinnati Stock Exchange

, Harold Bradle, senior vice president at

American Century

, and John Bachmann, managing director at

Edward Jones Investments


Tune in tomorrow for a dispatch from


Washington correspondent Christopher Schmitt on the hearings.

Aaron L. Task writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at .