SAN FRANCISCO -- "They've stopped going down" was the cry of relief as the week came to a close. Previously devastating declines were stemmed in the week's final day and a half, amid optimism the Federal Reserve will soon ease after more signs of economic slowing.

Friday's faltering rally called into question any expectations the long-anticipated bottom was finally in place. Once as high as 2749.06, the Nasdaq Composite closed up 1.8% to 2645.29. Similarly, the Dow Jones Industrial Average closed down 0.4% Friday to 10,373.54 vs. an intraday high of 10,524.45, while the S&P 500 closed up fractionally at 1315.18 after trading as high as 1334.67.

Nobody is going to look a gift rally in the mouth, especially after the Comp's recent declines. But the action Friday made it seem like Thursday's session, when major indices pared early big losses, signified nothing more than a one-day affair, rather than a reuniting of bullish leanings.

Perhaps the most troubling aspect of Friday's session was the lack of apparent reasons for the advance to halt, other than investors' lack of willingness.

"You could come up with a couple reasons to be bullish, and we're probably more favorably disposed than most , but we're not being aggressive," said Gary Farber, partner at Nightingale & Farber Capital. "We're doing the same thing as everyone else -- taking a wait-and-see approach . The risk/reward is not there" to justify aggressive bets.

Reflecting on the host of rumors in the market as the week came to an end, Farber observed that "when the market is up, every call is a whisper about how good it's going to be. When the market is down, every call is a whisper about negative preannouncements."

One firm in the rumor mill Friday, SBC Communications ( SBC), issued a press release after the close reaffirming its guidance.

Farber's Seattle-based firm is relatively small -- running a $3 million hedge fund and about $25 million in managed accounts. But the point remains that when people don't buy because they fear rallies will be met with selling, it can become a self-fulfilling prophecy.

Further damaging bullish tidings, major averages continued to go down in the week overall, with the Dow dipping 0.9%, the S&P 500 shedding 2%, and the Nasdaq losing another 8.9%. With just under a month to go in 2000, the Dow is now down 9.8% for the year, the S&P by 10% and the Comp a whopping 35% -- and about 47.6% below its March peak.

Nowhere To Run, Somewhere to Hide

Once up as much as 3.2%, the Comp ended Monday's session down 0.8%. Big tech losers included specialty chipmakers such as Xilinx ( XLNX) and Altera ( ALTR), which tumbled after some negative comments from Lehman Brothers. Similarly, Broadcom ( BRCM) suffered after Salomon Smith Barney cut its price target.

Meanwhile, blue-chip averages notched decent gains behind strength in pharmaceuticals, financials, and industrial names, including General Electric ( GE), which named a successor to legendary CEO Jack Welch.

Growth stocks worsened Tuesday as the Comp dumped 5%, ending at its lowest close in more than a year. Ongoing concerns about the still unresolved election were cited, but traders said the prior day's downgrades -- and fears of more earnings disappointments in tech -- were far more prominent factors.

The Dow and S&P fared relatively better than the Comp on Tuesday, suffering only minor declines as strength in financials, consumer staples and even precious metals stocks counterbalanced the big declines in tech.

The Comp kept falling Wednesday, but recovered from steeper declines earlier in the day to close off a relatively modest 1%. Meanwhile, the Dow climbed 1.2% behind strength in Old Economy stalwarts such as Procter & Gamble ( PG) and Boeing ( BA).

Any hopes the Comp's midday bounce Wednesday would continue were dashed by profit warnings after the close from Gateway ( GTW) and Altera ( ALTR). The news sent tech stocks and equity futures reeling after the close, setting the stage for a dramatic decline Thursday morning.

Early action Thursday justified such fears. But after trading as low as 2523, the Comp bounced to close off a relatively less harrowing 4% to 2597.92. Similarly, the Dow and S&P closed down, but well off intraday lows.

Keys to the minicomeback included the latest bout of positivism from Goldman Sachs' Abby Cohen and comments from St. Louis Federal Reserve President William Poole, who said the Fed would ease if the weakening stock market began to affect the "real economy."

In fact, the week was chockfull of more evidence the economy is slowing, and abruptly. These include Monday's decline in home sales; Tuesday's weak durable goods report; Wednesday's downward revision of third-quarter GDP and reports of slowing computer sales; Thursday's weak personal income and consumption, and the Chicago Purchasing Managers' report, plus rising initial jobless claims; and Friday's sluggish auto sales and NAPM reports.

But after the initial flurry, even growing anticipation of a Fed ease and a 5.3% decline in crude futures failed to inspire much buying Friday. (As an aside, most of the fire-eating stocks mentioned in my earlier piece Friday closed with solid gains, but well off intraday highs.)

Status Woe

Like the political situation, Wall Street ended the week pretty much the way it began. Bullish gurus such as Cohen and Christine Callies of Merrill Lynch -- who Friday wrote "the preconditions for a market trough continue to accumulate" -- remain bullish. Some former tech bulls, including Merrill's Steve Milunovich, have switched gears , but the bullish camp remains mainly intact.

Similarly, those who've been cautious largely remain so inclined.

Optimists rightly note high levels of cash in money market funds -- which grew by $26.1 billion in October alone, according to the Investment Company Institute. But inflows into equity funds totaled $19.1 billion in October, and resumed an upward path for the week ended Nov. 29, at $2.2 billion, after outflows of $5.6 billion the previous week.

"Despite the attraction of lower prices, we are not convinced that fear has yet risen to a level to accommodate the seriousness of the earnings decline we anticipate," Thomas McManus of Banc of America Securities declared in a report commenting on the inflow data Thursday evening.

Whether hopes for a more accommodative Fed, rising cash levels, and a sense stocks are simply cheap -- or even election resolution -- can produce anything more than short-term trading rallies remains an open question. But once again, it is the optimists carrying the burden of proof into the weekend.
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.