On an intraday basis, Thursday's session provided evidence of the notion that in a range-bound market, rallies are for selling and selloffs are for buying.

Major averages ended uniformly higher but off their late-morning highs following some afternoon machinations during another session of lackluster volume.


Dow Jones Industrial Average

closed up 1% to 7884.99 vs. its early best of 7924.62, reached at around 11 a.m. EST. The

S&P 500

gained 1.2% to 827.28 after having traded as high as 842.19, while the

Nasdaq Composite

rose 1.6% to 1323.96 vs. its apex of 1331.80.

Although up from Wednesday's levels, trading volume remained subpar. Almost 1.3 billion shares changed hands on the

Big Board

, where advancing stocks led decliners 2 to 1. A hair over 1 billion shares traded over the counter, where gainers led 19 to 12.

Following a path similar to U.S. stocks, the U.S. Dollar Index closed up 0.30 to 99.92 but off its early best of just above 100.

Despite the advance in stocks and a stronger-than-expected durable goods report, which caused earlier weakness, the price of the benchmark 10-year note rose 7/32 to 101 4/32, its yield falling to 3.74%. (This column took

a more detailed look at the bond market earlier Thursday.)

After a brief setback in the opening 30 minutes of trading, shares rallied steadily until hitting their intraday peaks shortly after 11 a.m. EST. The early gains were presumably aided by a better-than-expected durable goods report, a lowering of the government's terror alert level and some apparent concessions from Saddam Hussein regarding banned missiles.

I say presumably because I still believe the market's daily gyrations are less the result of geopolitical events than is commonly ascribed, and more due to technical factors and other considerations.

"A combination of a short squeeze, program trading and end-of-the-month portfolio games," probably contributed as much to the gains as anything else, which James De Porre observed at



On a related note, one trader observed: "I don't think I can remember a time where so many people were afraid of missing a rally."

The apparent eagerness of professional traders is in sharp contrast to the outlook of retail investors, at least judging by mutual fund data. Equity mutual funds suffered outflows of $466 million in January, the Investment Company Institute reported Thursday. That's less than the $1 billion of outflows estimated by Lipper, as

The Wall Street Journal

reported Monday, but it nevertheless confirms the first January of outflows from equity funds since 1990.

Certainly it was far-fetched to think that Hussein's pledge to destroy the al-Samoud missiles would be sufficient to end the threat of war, and President Bush said as much late morning. Shortly thereafter, United Nations chief weapons inspector Hans Blix was quoted as saying Iraq's disarmament has been "very limited" to date, buttressing the president's hard-line stance. (Meanwhile, the U.N. Security Council conducted a closed-door meeting to discuss the Iraq situation, and Blix is scheduled to address the council this weekend.)

Shares fell steadily from the late-morning highs. But the aforementioned fear of missing a rally, and other factors kept major averages in positive territory and they rallied in the final hour of trading. A setback for crude futures also aided sentiment. After trading as high as $39.99 per barrel, the highest level since Oct. 12, 1990, crude futures closed down 1.3% to $37.20 per barrel.

Gold, conversely, was weak throughout the session and retreated in the face of a rising dollar and U.S. stocks. Gold futures ended down 2.2% to $346.20 per ounce, while the Philadelphia Stock Exchange Gold and Silver Index lost 1.3%.

On the economic front, the highlight was a 3.3% rise in January durable goods orders vs. expectations for a 1% rise and December's decline of 0.4%, revised from an original drop of 0.2%. On the downside, new-home sales dropped 15.1% last month to an annualized rate of 914,000, the slowest pace since January 2002 and vs. expectations for a rate of 1.05 million. Additionally, November and December sales were revised downward.

As was the case with Tuesday's strong existing-home sales report, Thursday's weaker-than-expected new-home sales did not greatly influence shares, beyond homebuilders.

Ryland Group



D.H. Horton

(DHI) - Get Report

were among the bigger percentage losers as the S&P Homebuilding Index fell 0.7%. (The setback notwithstanding, some managers remain bullish on the group, as discussed


Rethinking Dow Theory

Earlier in the week, I noted how the Dow Jones Transportation Average violated its October (and 52-week) lows intraday

Tuesday. The question, I wondered, is whether the Dow Industrials would follow suit and "confirm" that move.

Over lunch in San Francisco today, I ran that by Jack Schannep, editor of

Schannep's Timing Indicator

and TheDowTheory.com. He suggested that what's more important than the intraday breach of the October lows is that the Transports then rebounded and closed well above that level of 2008. He also noted that the Dow remains well above its October lows of around 7197.

"The market is still above the October lows and does not yet qualify for a renewed bear market," Schannep wrote in his most recent letter, referring to cyclical moves vs. secular ones. "And yet, with world events so incredibly precarious, it seems prudent to be half in and half out, waiting to see what happens next."

Some might say it's more prudent to be


out of stocks, but then again, you wouldn't want to might miss the next rally, would you?

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. JRaess: 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.