SAN FRANCISCO -- To paraphrase one of the

most infamous quotes in's

brief history: This week was dominated by the Christmas holiday on Tuesday.

A holiday-type atmosphere prevailed this week, as many market participants took off the days before and after Christmas. The result was some of the lightest trading days of the year. That, in turn, resulted in some dramatic intraday swings.

A pattern evident through much of the week re-emerged Friday, as stocks rallied sharply at the onset of trading, only to rescind the bulk of those gains by day's end. After trading as high as 10,184.45 -- the highest intraday since Aug. 29 -- the

Dow Jones Industrial Average

closed up 0.1% to 10,137.61. The

S&P 500

ended up 0.3% to 1160.33, after trading as high as 1164.64, while the

Nasdaq Composite

finished up 0.6% to 1987.27, after reaching as high as 2002.72.

"There's a distinct lack of liquidity," said Bob Basel, director of listed trading at Salomon Smith Barney. "I'm not putting any meaning into anything -- the

late-day selloffs mean nothing

and neither does the action in general" this week.

Basel attributed the market's overriding positive trend -- for the week, the Dow rose 1%, the S&P 500 gained 1.4% and the Comp climbed 2.1% -- to fund managers "trying to mark some stocks up" as the year comes to a close.

The trader referred to the alleged practice of some money managers buying stocks they already own in an effort to artificially -- or at least, temporarily -- enhance their funds' performance. Such activity is most pronounced at the end of quarters, and it's striking that such practices, which are illegal, are discussed so nonchalantly.

Looking ahead, Basel suggested the market "might see a little bit of a pullback" after the first of the year "if this markup continues."

But the trader forecast the market is most likely to rally in the first quarter, especially if fund managers enter the year with an optimistic view and/or concerns about falling behind the indices, as many did after the market started rallying in late September.

Michelle Clayman, chief investment officer at New Amsterdam Partners, for one, is "mildly optimistic" about 2002, forecasting 7% to 9% gains for the major averages.

"I don't see any reason for a large selloff," she said. "Yes, we've had a huge run since the end of September but we're also seeing a lot of improving data."

On Friday, the Conference Board's consumer confidence index for December posted its first rise in six months, while the Commerce Department reported new home sales rose in November at their fastest pace since March. Commerce also reported that durable goods orders fell 4.8% in November after rising 12.5% in October; but that was better than the 5.7% decline expected, and orders for nondefense and nontransportation items both rose for a second straight month.

Clayman noted the above, as well as declining inventories, still low oil prices (which dipped Friday following OPEC's

well-telegraphed production cuts), the prospect for still more

Federal Reserve

easing and inflation's continued quiescence: "Things are in place for a decent economic rebound," she said.

Given that outlook, Clayman is most favorably disposed toward basic materials and capital goods companies, i.e., the so-called old economy. Her current favorites include


(MTW) - Get Manitowoc Company, Inc. Report

, which makes cranes, and



TheStreet Recommends

, a supplier of industrial gases.

New Amsterdam Partners, which has $1.4 billion under management, has long positions in each. The fund's biggest holdings include

Countrywide Credit

(CCR) - Get CONSOL Coal Resources LP Report



( CNF),


(LOW) - Get Lowe's Companies, Inc. (LOW) Report


General Mills

(GIS) - Get General Mills, Inc. (GIS) Report


Pulte Homes

(PHM) - Get PulteGroup, Inc. Report


Wellpoint Health Networks



The firm has market-weight allocation in tech stocks, and Clayman believes the industry will rebound next year. But "you're not going to have the heady growth

of the late 1990s because there's still overcapacity," the fund manager said. For that reason, she's concerned "valuation multiples are stretched" again in tech/telecom.

A second reason Clayman is only mildly bullish for 2002 is that so many companies took writedowns and charge-offs this year. "Next year's profits will make them look like heroes, but it's somewhat disingenuous," she said.

The key for investors is to figure out how to make "apples-to-apples" comparisons by digging through the footnotes in


filings, she said. "It's legwork,

but the


( ENE) debacle has told us we all have to get back to basics. You can't ... make broad statements

or accept them from management."

That said, here's a broad statement about next week: It's going to be dominated by the New Year's holiday, for which financial markets are closed on Tuesday.

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.