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SAN FRANCISCO -- After a week in which investors reaffirmed their faith in the healing powers of

Alan Greenspan


can I get an amen?

), the question now confronting Wall Street is whether the bull market will prove born again, or dead on arrival.

That question was thrown into further dispute shortly after the market closed Friday, when the

Florida Supreme Court

ruled, by a 4-to-3 margin, that manual recounts should proceed immediately and that votes received by

Al Gore

in aborted recounts in Miami-Dade and Palm Beach counties should be included in election tallies.

"From the market's perspective, certainly, this

ruling is going to put another shadow of concern, either because of a Gore presidency or the fact

the election won't be resolved" soon, said Randy Billhardt, senior trader at

UBS Warburg

in Stamford, Conn. "It will certainly dampen some of the momentum we've been trying to create all week."


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S&P 500


Nasdaq 100

futures fell sharply in immediate reaction to the court's decision.

Cautioning that he is not a political analyst (nor am I), Billhardt acknowledged the court's ruling raises the possibility the

Florida Legislature

will send a separate slate of electors to the

Electoral College

when it convenes Dec. 18. That would likely mean the election will ultimately be decided in the

House of Representatives

, meaning the

1876 scenario suddenly isn't so far-fetched.

"The markets want


rather than Gore, but people just want an end" to the endless election, the trader said. The ruling "opens up a Pandora's box and creates more uncertainty. We had a potentially nice year-end rally waiting to happen, but if this drags out

further people will be less willing to put money to work."

Prior to the Florida Supreme Court's mind-boggling ruling -- which caught probably everyone except Al Gore by complete surprise -- the week was dominated by the


chairman's speech Tuesday. Market players interpreted his comments as a sign of central-bank easings to come, which helped major averages overcome another slate of profit warnings and end the week uniformly higher. The

Dow Jones Industrial Average

rose 3.3% for the week, the

S&P 500

climbed 4.2%, and the

Nasdaq Composite

jumped 10%.

As the weekend beckoned,

optimists were putting their faith in the ability of the Fed to trump election messiness. Simultaneously,

pessimists questioned the Fed's restorative powers.

Whichever argument ultimately proves correct, clearly the latest twist in the election saga has somewhat diminished an otherwise fairly significant victory this week for those long.

Thank You for the Kool-Aid, Uncle Al

The renewed enthusiasm Billhardt alluded to was most glaringly evident Tuesday, when the Nasdaq enjoyed its best-ever point and percentage gains, while the Dow and S&P produced healthy gains as well. That Tuesday's session was followed by declines Wednesday and Thursday was all but forgotten Friday, when the Dow rose 0.9%, the S&P gained 2% and the Comp rose 6%.

The catalyst for Friday's advance was the

employment report

. Market participants chose to focus on the weaker-than-expected payrolls figure and an upturn in the unemployment rate, rather than a larger-than-expected rise in average hourly earnings. The main components of the jobs report plus a big decline in the

University of Michigan

consumer sentiment survey further fueled talk of a Fed ease, pushing equity proxies higher into the weekend.

Beyond the macro issues, some said Friday's advance was more significant than Tuesday's because it not only confirmed the Greenspan-related action, but came despite a profit warning late Thursday from


(INTC) - Get Intel Corporation Report

. Intel itself rose 0.8% Friday amid a sense investors had become overwrought with (and overrun by) negative sentiment.

One San Francisco-based hedge fund manager, who requested anonymity, said that was evident in options trading, where open interest in Intel puts outweighed calls by nearly 2 to 1 heading into Friday's action, down from about 5 to 1 on Wednesday.

"There was so much speculation of a preannouncement

from Intel, everybody was betting on it," the hedge fund manager said. Observing a number of stocks -- for example




National Semiconductor


-- which weren't obliterated by respective warnings earlier in the week, he speculated: "Either the major

long positions were hedged and had no need to dump on bad news, or shorts have run

stocks to levels where there's not much downside."

The source expressed some surprise the "heavily skewed" bets against Intel -- and the market in general -- didn't result in a bigger short squeeze on Friday. Naysayers pointed to the fact both Intel and major averages closed off intraday highs Friday as evidence the rally was already losing steam -- and that was before the Florida Supreme Court's ruling.

"But I suspect next week as

triple-witching expiration comes in, we'll see a lift across the board," the hedge fund manager said (also before the court's ruling).

Fund managers who've written calls to protect long positions in





(CSCO) - Get Cisco Systems, Inc. Report

, for example, might now be scrambling to buy those calls back, rather than risk having those calls exercised and their stocks "called away," he explained.

Market makers that sell those calls back to the fund managers will then "go buy the underlying

stock to hedge themselves," he continued. "Once you get the ball rolling as you approach expiration, it's pretty dramatic how much leverage is out there

and how much demand comes out of nowhere."

The manager noted

expiration week was the best one in an otherwise bleary November, suggesting the nascent rally should continue next week. But in November, "as soon as that

expiration week was over, they clubbed it again," he recalled. A

similar pattern was evident in October.

Talk of hedged positions brings me

back (again) to the

Commodity Futures Trading Commission's

Commitment of Traders report. The latest data, out Friday afternoon, showed commercial hedgers net short a record 86,468 S&P 500 futures contracts through Tuesday, according to

Bianco Research

, an increase from last week's 81,194 contracts. Large speculators were net long 9,966 contracts, down a bit from 10,721 the prior week.

So it seems Tuesday's big rally did nothing to dissuade hedgers from betting the market will fall; in fact, it might have compelled them to extend those bets.

Meanwhile, hedgers were net long 2,120

Nasdaq 100

futures contract vs. 673 the prior week, while speculators were net long 1,204 NDX futures, down a touch from 1,215 the previous week.

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.