Major stock proxies were waffling between positive and negative Monday, but trading was subdued to the point of sleepiness.
As of 1:56 p.m. EDT, the
Dow Jones Industrial Average
was down 0.06%, the
was up 0.01% and the
was higher by 0.06%. Volume on both exchanges was modest.
Retailers were among the groups weighing on major averages after
said its November sales will be at the low end of expectations. Wal-Mart was lately down 1.7% and the S&P Retailing Index was off 0.7%.
was down 5% after a downgrade from a Lehman Brothers analyst who, presumably (tongue firmly in cheek here), has no nursery school-age children .
, whose one-time star telecom analyst Jack Grubman allegedly once upgraded AT&T as part of a bizarre effort to get his children into a prominent Manhattan nursery school, was lately down 1.1% amid ongoing revelations of the scandal.
was down 3.1% following a Salomon Smith Barney downgrade.
The Comp's modest gain was being fostered by strength in Nasdaq 100 names such as
, which was announced as the exclusive retailer for the human transporter "Segway", as well as
RF Micro Devices
. The NDX was lately up 0.6%.
Monday's renewed bout of relative strength by four-letter tickers gets to the heart of an ongoing debate on Wall Street about the market's near-term fate.
While I've certainly heard all the bearish views about why and how this market is going to "implode" anytime now, I don't see it happening before year-end, as I opined late Friday in
Columnist Conversation. In fact, it would seem seasonal factors, as well as money managers'
performance anxiety, should keep stocks on a mainly higher path into early 2003. (That said, short-term pullbacks are obviously possible at any juncture and, for the record, I don't believe the bear market has ended or that the final lows have already occurred.)
Notably, this near-term outlook is slowly being adopted by even some previously skeptical observers.
"Our target of 1375 for Nasdaq has proven too conservative," John Roque, senior analyst at Arnhold & S. Bleichroeder and occasional
contributor conceded Monday morning. "The next upside level we're targeting for Nasdaq is 1486."
With typical bluntness, Roque observed that "right here the best survival tactic is a four-letter offense ... as long-only guys frantically try to pick up some precious relative performance points."
Among the four-lettered names Roque favors are Amazon.com,
; each was higher at midday.
Of course, that a one-time naysayer such as Roque would turn positive here (even for a near-term trade) could be construed as evidence that "rose-colored glasses are worn by all," as Alan Newman, the oft-bearish editor of H.D. Brous & Co.'s
opined Monday. "Highly charged expectations are still visible. Perhaps stocks can rally as high as Dow 9000 and S&P 960, but the inevitable flip side of the coin is Dow 6400 and SPX 680." (Notably, his upside target for the Dow is the same as Roque's, whose target for the S&P is lower, at 950.)
Given that major averages entered this week much nearer to the high end of those upside expectations, "risks are accordingly high," Newman wrote, suggesting the market could experience "a turn of significance" at Thanksgiving or shortly thereafter.
Obviously, that remains to be seen. Meanwhile, a large number of skeptics are jumping on this "everyone is getting too bullish" notion. In reaction to the aforementioned Columnist Conversation post on Friday, I received an email from a reader who observed that for the month ended Friday, the market has essentially gone nowhere, which was true for the S&P, up by 3.2%, although the Comp had risen by 10% from Oct. 15 to Nov. 15.
Meanwhile, over the same time frame, he noted:
The CBOE Market Volatility Index has gone down 22.4%. (Of late, the VIX was off 2.5% to 30.05);
The CBOE equity put/call ratio has gone down from 0.78 on Oct. 15 to 0.57 on Nov. 15;
The level of bullishness in the Investors Intelligence survey has gone from 28% on Oct. 15 to over 50% as of Nov. 13.
"The market continues to generate greater bullishness," observed Phil Erlanger of Erlanger's Squeeze Play. "A healthy market would be able to sustain doubt, fear and bearishness at this juncture. Instead, rapture is in the air. Sure the market may be able to move higher, but we suspect it won't take much more upside to get a major point of resistance for the market."
On the other hand, it might not take much more upside to get mutual fund investors interested in shares again, and recent inflow data suggest the post-Oct. 9 rally is already getting their attention.
Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to
Aaron L. Task.