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SAN FRANCISCO -- The earnings kept coming and, mostly, they were fine.

Alan Greenspan

spoke, and his testimony was pretty benign. Yet


occurred in the week just past to suggest the market's upward momentum has ebbed, at least for a time. (Welcome to the


Poets Society.)


Dow Jones Industrial Average

fell 0.7% this week, while the

S&P 500

shed 2%, the

Nasdaq Composite

declined 3.6% and the

Russell 2000

lost 3.7%.

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The week got off to a positive start, although buying was muted Monday as investors awaited earnings reports due throughout the week. Still, buying in anticipation of favorable results helped spur stocks such as

Copper Mountain Networks


higher. But investors in that name, among several others, soon would discover the perils of buying "on the rumor."

Copper Mountain dumped 24% on Tuesday after its earnings -- reported late Monday -- merely beat expectations, rather than blowing them away. A host of other momentum favorites such as



also declined, while semiconductor names were hit by cautious comments from

Merrill Lynch

. Those declines, plus weakness in financials, sent stock proxies down in unison.

The declines accelerated Wednesday as earnings reported late Tuesday by


(MSFT) - Get Microsoft Corporation Report



(INTC) - Get Intel Corporation Report

, and


(AAPL) - Get Apple Inc. Report

were greeted with cynicism. Each of those tech giants posted quarterly results that -- at first glance -- bested expectations. But each provided reason for concern, be it flat revenue growth or cautious comments about the outlook going forward. Separately, a profit warning by

United Air Lines



(UAL) - Get United Airlines Holdings, Inc. Report

, sent transports reeling.

Given the Nasdaq rose more than 30% from its close on May 24 through Monday's finish, most investors were not fazed by the declines Tuesday and Wednesday. But with the index falling back into negative territory for the year after Wednesday's decline (breaching some key short-term technical support levels in the process), others expressed concern, especially with Greenspan's


testimony looming ahead on Thursday.

Greenspan Giveth, Warnings Taketh Away

Concerns about Greenspan proved unfounded. The

Federal Reserve


testimony alluded to signs of a slowdown in the economy, suggesting (to some) the central bank will not raise rates at its August meeting and (to a few) not again this year. Others were less comforted.

"Inflation numbers are clearly not in a disinflationary mode," said Ned Riley, chief investment strategist at

State Street Global Advisors

in Boston, referring to Tuesday's

Consumer Price Index

report. "The overall level including energy should be worrisome to the Fed." Overall CPI rose a bigger-than-expected 0.6% in June, while the core rate -- excluding food and energy -- rose just 0.2%.

Riley believes the Fed -- and the market -- have been lulled into a false sense of security regarding productivity, suggesting the "real test" hasn't come because companies have, thus far, enjoyed the benefits of strong unit volume growth to offset higher costs, such as labor.

But as the economy beings to slow, "more frontline tech companies are detecting some kind of cracks in this perfection story," he said, noting sluggish revenue growth at


(IBM) - Get International Business Machines Corporation Report

and Microsoft, as well as disappointing overall results at



and warnings from various other tech names. "There's evidence there is some cyclicality in tech areas, yet market recognition of that issue seems negligible. People aren't drawing the linkage between one company's problems and another's."

Indeed, Lucent shares fell 16% Thursday but investors focused on the bullish elements of Greenspan's testimony and IBM's report, igniting a huge snapback rally. The advance also was aided by strong earnings from growth favorites such as

Extreme Networks

(EXTR) - Get Extreme Networks, Inc. Report

, as well as

JDS Uniphase


being tabbed for inclusion in the

S&P 500


The good tidings from Thursday's ascent had little time to gestate, however, as a profit warning after the bell from


(A) - Get Agilent Technologies, Inc. Report

augured tough sledding on Friday.

Indeed, warnings from Agilent and



overshadowed positive results from

Sun Microsystems

(SUNW) - Get Sunworks, Inc. Report

as techs led a broad retreat to end the week.






(XLNX) - Get Xilinx, Inc. Report

provided nice bookends to Copper Mountain's experience early in the week, falling 26.2% and 11.8%, respectively, on Friday after their earnings failed to wildly beat analysts' expectations.

Clearly, the week was no disaster for those long, and the market's big advance Thursday encouraged many players that buyers remain in control.

"I'm comfortable with what's going on -- there's opportunity to pick up some stocks on the cheap," said Sam Ginzburg, senior managing director of equity trading at


. "People are initiating shorts at these levels but I think those guys are going to get hurt. You've got to find the right stuff but I feel like we're going to be rallying."

However, even Ginzburg admitted the going has gotten tougher.

"This is not a really liquid tape like in the heyday where things were running;

now it takes more effort from the salesmen, more homework on the analytical side," he said. "Institutions are being pickier also. There's more wood burning all over Wall Street," meaning the environment is forcing more brainpower to be put to use than in a long time.

The trader also noted the best strategy of late -- aside from maintaining discipline -- is to "go against the flow."

Given the way this week unfolded and assuming that strategy remains successful, that suggests a rally is in the cards for early next week, although it may have a tough time sustaining itself.

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 welcomes your feedback at .