Major averages struggled for a second-straight session Wednesday, but ended fairly close to the multimonth highs set Monday. Underscoring the still bullish tone of trading, stock proxies ended well off session lows.

After trading as low as 9778.31 midafternoon, the

Dow Jones Industrial Average

rallied sharply in the final hour, closing off 0.2% to 9820.83. The

S&P 500

ended down 0.1% to 1051.81 but off its nadir of 1044.88 while the

Nasdaq Composite

gained 0.1% to 1959.37 vs. its low of 1938.20.

The underlying optimism, particularly for tech shares, received a modicum of justification after the close.


(CSCO) - Get Report

reported fiscal first-quarter earnings of 17 cents per share on a pro forma basis, 2 cents ahead of consensus estimates, while revenue of $5.1 billion exceeded forecasts of $4.8 billion.

After rising 0.7% to $21.74 in the New York session, Cisco shares were trading over $23 in the initial after-hours reaction to its results.


(QCOM) - Get Report

shares also were up after hours after the company posted better-than-expected earnings and raised guidance for 2004 above estimates. Nasdaq e-mini futures were sharply higher in concert in Globex trading although S&P futures were down 1.80 to 1050.50 as of 4:20 p.m. EST.

Anticipation of Cisco's earnings restrained trading Wednesday, as did anticipation of Friday's employment report. The session largely amounted to a battle around S&P 1050, a technically significant level that had recently been resistance but now represents support for the index.

At 1.2 billion shares on the Big Board and 1.8 billion over the counter, volume was down from recent days but still decent.

Wednesday's economic news failed to inspire much activity. The Institute for Supply Management's nonmanufacturing index rose to 64.7 for October from 63.3 last month, besting the consensus estimate of 63.4. September factory orders rose 0.5%, slightly below expectations, but August's decline was revised to 0.3% from 0.8% originally.

The price of the benchmark 10-year Treasury fell 13/32 to 99 7/32, its yield rising to 4.35%. The dollar rose to 109.91 yen vs. 109.58 late Tuesday while the euro slid to $1.1439 from $1.1495. Gold futures rose 0.6% to $382.20 per ounce.

Among individual names,


slid 26% and



shed 7.9% after each posted disappointing quarterly results and/or guidance.

Notable gainers, on earnings news, included

National Semiconductor


, up 4%, while retailers

Tommy Hilfiger



Polo Ralph Lauren

(RL) - Get Report

gained 8.6% and 2.3%, respectively. The Philadelphia Stock Exchange Semiconductor Index rose 1%.

Additionally, homebuilders were notable gainers after

Beazer Homes

(BZH) - Get Report

reported strong fourth-quarter earnings and 2004 guidance. Additionally, the Mortgage Bankers Association's index of mortgage loan applications increased 5.5% last week. Applications for new purchases rose 11% to its highest levels of the year, although refinance activity remains off some 75% from its May peak. Beazer Homes rose 4.9%, helping the S&P Homebuilding Index climb 2.8%.

Word Power

Turning back the clock a bit, many readers reacted angrily to

Monday's column, particularly the headline: "Bears Are Running Out of Arguments."

The emails leaned at least 10 to 1 toward those who argued vehemently for the righteousness of the bearish view, which says


about the state of sentiment.

The point of the piece was that for the past 13 months, the market has tossed aside any and all issues the bears have raised, not to recommend that investors ignore all risks or suggest there isn't merit to the bearish arguments. Valuation, for example, doesn't matter

until it matters

. But right now, the onus is on the bears to explain why their cynicism will suddenly hold sway, when it has persistently failed to do so since the October 2002 lows, certainly since the March lows.

There was also a lot of feedback about whether major averages really have diverged from the

postbubble Nikkei experience, as I suggested. Based on the number of trading days from the Nikkei's Aug 19, 1992, bottom to its 1993 rally peak, the Nasdaq should have peaked around Oct. 24. Hence, my point that the analogy could still unfold but the timing would be "slightly askew." I referred to the timing of the action, not necessarily the action itself.

However, a money manager who's been following the Japan analogy notes the Nikkei's peak in 1993 occurred 1345 calendar days after its 1989 all-time peak. A similar span would equate to a mid-November high for the Comp, based on its March 10, 2000, all-time closing high.

So it's probably too soon to totally dismiss the Nikkei analogy, which is based on the theory that investors act in certain, discernible patterns in a postbubble environment, even though there are major fundamental differences between the U.S. today and Japan in the early 1990s.

A mid-to-late November peak is also the forecast of Woody Dorsey, president of Market Semiotics and an expert in behavioral finance. "We continue to be vigilant in looking for a top, topping pattern, reversal or distribution breakdown over the next one-to-three weeks," Dorsey wrote Tuesday. "Next week is the first ideal timeframe for a high and, as noted for months, the best bearish profile is from

around Nov. 21 into year end. It behooves everyone to wait for a clear signal before actualizing the short-selling situation which is sure to come, in time."

After being steadily bullish since late in the first quarter, Dorsey is now predicting a "hard move down" ahead, leading to a "down December."

Something tells me the immovable cynics out there are going to eagerly embrace his latest call.

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.