Against the backdrop of remarkable and historic developments in Iraq this week, the stock market resorted to its historical pattern of trying to frustrate as many market participants as possible.

In the end, it was a modestly negative week as the

Dow Jones Industrial Average

shed 0.9%, the

S&P 500

slid 1.2% and the

Nasdaq Composite

lost 1.8%. In other markets, 10-year Treasury yields rose three basis points to 3.98% and crude futures dipped 1.7% to $28.14. But gold futures climbed 1.5% to $328.50 and the U.S. Dollar Index lost 0.3% to 100.17, even after rallying Friday.

Belying those relatively modest moves for stock proxies was a week in which both bulls and bears thought they'd seized the moment at various points, but couldn't be totally sure.

The week began with the optimists aroused by allied progress on the war front. But after eclipsing key technical levels early Monday, major averages reversed midday and closed with paltry gains. To many, that

technical failure was glaringly bearish. On Tuesday, however, major averages were basically flat as speculation Saddam Hussein had been killed restrained traders' desire to short or sell stocks.

The bearish outlook was reinforced more strongly

Wednesday, as major averages fell in concert with the literal and metaphorical toppling of Hussein's regime. The setback seemingly vindicated observations that the presumptive victory in Iraq was already "priced into" shares long before the actual event. Once military victory became a reality instead of a possibility, traders were forced to deal more directly with a still-grim outlook for economic growth and corporate earnings.

On Wednesday,

Blue Chip Economic Indicators

reported its April survey showed economists expect GDP growth of 2.4% in 2003, down from 2.6% in March's survey and 2.8% in January. On Thursday, the Business Roundtable said 45% of its members expect to cut jobs this year vs. just 9% expecting to increase hiring. And only 56% expect sales to grow this year vs. 71% in November. Also,

The Wall Street Journal

reported its survey of economists showed expectations for GDP growth dropping to 1.7% for the first quarter and 2.1% for the second, from 2.7% and 3.2%, respectively, in December.

This week also saw notably poor results from retailing giant


(WMT) - Get Report

and the decline of 0.2% in the Bank of Tokyo-Mitsubishi's same-store sales index -- the weakest March since 1995. Also, weekly jobless claims fell but remained above 400,000, and the four-week moving average stands at 419,500.

Conversely, the University of Michigan's consumer sentiment index was higher than expected, and retail sales rose 2.1% in March, the biggest increase since October 2001 and reversing a 1.3% drop in February. Also Friday, the Economic Cycle Research Institute reported its weekly leading index rose to 120.5 for the week ended April 4 vs. 119.2 the prior week. The index's six-month growth rate rose to negative 0.1% from negative 1%. (The weekly index was consistent with the cautious optimism expressed here

last Friday by ECRI research director Anirvan Banerji.)

Meanwhile, earnings season heated up with disappointing top-line results from



, and warnings from firms such as

RF Micro Devices



Microchip Technology

(MCHP) - Get Report

. There was also speculation from Goldman Sachs and First Albany about disappointment to come from


(MSFT) - Get Report

when it reports on April 15.

Offsetting those negatives were better-than-expected results and/or reaffirmed guidance from




United Technologies


General Electric

TheStreet Recommends

(GE) - Get Report

; GE's actual results matched expectations. Meanwhile,


(MO) - Get Report

got a reprieve from its recent legal woes and rose 8.1% for the week.

Late Week Lethargy

Following Wednesday's slide, stocks posted a modest rally Thursday, which undercut the bearish trend. Shares then rose sharply early Friday, before fading to close modestly lower with the Dow off 0.2%, the S&P 500 down 0.4% and the Comp off 0.5%.

The pattern of early strength in preopen futures trading or at the New York open (or both) followed by an inability to sustain gains occurred repeatedly this week, something one trader dubbed an "ominous trend."

Other notable -- and bearish -- developments this week included a spike in bullish sentiment in's

Investors Intelligence

survey and the VIX's first close below 30 since mid-January. On Friday, the CBOE Market Volatility Index fell 2.4% to 28.27, ending the week down 14%.

Add to that weekly reversals for the major averages -- higher intraday highs and lower lows than the prior week -- and the market's technical picture looks pretty bleak, while the fundamental outlook is muddled, at best. Meanwhile, the 12-month trailing price-to-earnings ratio for the S&P 500 is over 31, based on reported or GAAP results.

Given all that, it's hard not to recommend investors "sell" shares as Jeffrey Hirsch, editor and Publisher of

Stock Traders Almanac

, did on Friday, reversing a buy recommendation made on Oct. 2.

The call is based on MACD (moving average convergence-divergence) trends and the almanac's seasonal "Best 6 Months" switching strategy. Hirsch recommended raising cash and stops on equity positions, as well as implementing shorts, bearish option strategies and hedges.

"With much accomplished already in Iraq, Wall Street is now focused on the potentially lengthy rebuilding process and the sketchy economic and earnings outlook," Hirsch wrote. "We believe better buying opportunities will present themselves during the historically weak months

of May-October."

However, not everyone reached the same skeptical conclusion.

Optimists observed firms such as


(GCI) - Get Report


Dow Jones


, and


(GPS) - Get Report

"ignored the news of poor fundamentals and rose in price," as Seabreeze Partners' Doug Kass opined at


"This is an important tell. If it continues, it will embolden long buyers and scare the heck out of the shorts!" Kass wrote. (He has no positions in the aforementioned, although he is long the

Nasdaq 100 Unit Trust

(QQQ) - Get Report


Dow Diamonds

(DIA) - Get Report


Others noted that while the Dow and S&P failed to stay above their 200-day moving averages Monday, they remained above their respective 20-day moving averages throughout the week. Meanwhile, the Comp remained above its 200-day. Also, trading volume was subdued -- Monday was the week's only session over 1.3 billion shares on the

Big Board

and Friday one of the slowest days of the year -- while the trend of higher volume on up days vs. down remains intact. Finally (

pant, pant

), one source observed most of the negative corporate news came from smaller-cap names vs. more positive results from industry leaders, Wal-Mart aside.

In sum, there was something for everyone this week although ultimately more for the bears.

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.