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A combination of factors had traders bracing for the worst Thursday morning. But as is so often the case on Wall Street, the expectations were stymied. The question, however, is whether the market's performance was good news, or bad?

After trading as low as 9927.40, the

Dow Jones Industrial Average

was recently down 40.41 to 9990.02. The Dow's breach of 10,000 -- its first since late February -- was expected by many traders following

Wednesday's late-day slide.

Broader market averages fell in sympathy, but early losses were stemmed fairly quickly. The

S&P 500

was recently down 2.81 to 1090.15 after trading as low as 1084.81, while the

Nasdaq Composite

was at 1713.04 after trading as low as 1697.52, near its Feb. 22 intraday low -- a key technical support level.

Equity futures had pointed to a significantly lower opening in the wake of

Tyco International


reporting a net loss of $1.9 billion and -- more tellingly -- announcing the reversal of its plans to break up the company.



TheStreet Recommends


said it will take a $313 million charge and that the

Securities and Exchange Commission

is probing the contracts with one of its natural gas suppliers. Further weighing on sentiment,

Network Associates


said it may have to restate results for 1999 and 2000 while

Dow Chemical

(DOW) - Get Dow, Inc. Report

posted lower-than-expected first-quarter results.

Beyond the corporate news, traders were concerned about a possible splintering of U.S.-Saudi relations ahead of President Bush's Thursday meeting with Saudi Crown Prince Abdullah. An article in

The New York Times

suggested "there was talk within the Saudi royal family and in Arab capitals of using the 'oil weapon' ... if Mr. Bush does not moderate his support for Israel's military policies."

Predictably, those developments had oil and gold prices higher in the early going, while the dollar weakened and stock traders prepared for the worst.

Still, the fears of equity market participants were underscored by hope and anticipation that a crescendo of selling might create an opportunity for savvy buyers willing to step into the breach. Such sentiments were expressed by contributors at's

sister sites. I'm republishing a sample here because most readers don't have access to them (subscription has its privileges) and, more importantly, they accurately reflect the sentiment of most market participants.

Before the opening bell,'s

James "Rev Shark" De Porre wrote:

This market is doing what is probably the healthiest thing that it could do: wash out some people with a fairly weak open. We may finally be seeing sufficient extremes in bearish sentiment that a tradeable bottom may form. If you're a bull who wants to get long, a little fear and panic this morning is exactly what you want to see.

Similarly, Keith Keenan, vice president of institutional trading at Wall Street Access, wrote in's

Put N Call column:

Futures are indicating a lower opening for stock prices. The bulls should actually be happy that the market is going to open lower; the shorts-sellers are looking to cover this morning, generating the possibility of a reversal to the upside.

As I noted in the

Columnist Conversation, the bears "scored" early but weren't able to generate a "knockout" punch, or even a TKO (boxing terminology).

"That was definitely NOT a panic," quipped one longtime reader. "

Au contraire.

That was viewed as a buying opportunity which is just going to keep us in this ... water-torture mode."

How Bearish, Really?

Indeed, the great number of traders looking to buy into signs of fear may be forestalling the watershed decline that so many believe is necessary to signal a sustainable bottom is at hand. Furthermore, hardcore bears say that because


is looking for the big cascade as a buying opportunity, that means sentiment really hasn't gotten so negative.

That is the view of Woody Dorsey, president of Market Semiotics in Castleton, Vt., who believes "the greatest surprise to market participants would be another leg down in equities to the lows of last September."

Based his proprietary sentiment indicators, short-term sentiment hit an extreme level of bullishness last Wednesday. Combined with his assessment of long-term patterns of behavioral economics, that reading has Dorsey convinced his

capitulation call last week is more likely to prove prescient.

Regarding the bullish argument that the negatives are well-known and stock proxies haven't faltered yet despite the raft of negative news -- corporate and geopolitical, Dorsey answered as follows: "Markets always go to extremes." Everybody knew dot-coms were overvalued in 1999, but short-sellers suffered greatly for months thereafter, he recalled.

If the market does retest its September lows, "we might witness what Wall Street has been desperately trying to identify, unsuccessfully, for two years...'The Capitulation,' " he wrote. "Possibilities favor that such a capitulation phase or panic, if it occurs, is likely sooner rather than later."

But with so many participants looking for it -- even hoping for it this morning -- the much-anticipated event failed to materialize yet again.

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 invites you to send your feedback to

Aaron L. Task.