Do the fireworks that erupted on Wall Street last week, ignited by low interest rates, signal the start of a prolonged rally?
Or does the string of record-setting sessions in the stock market merely mean a decrepit bull is giving a few last gasps?The answer probably lies somewhere in between.
People who make a living by giving investment advice caution against reading too much significance into the Dow Jones industrial average crossing over the 3,600-threshold, as it did for the first time last Wednesday. Yet they admit the milestone has psychological importance.
Another positive factor for the market's psyche was the performance of broader market indicators, especially the New York Stock Exchange's composite index. In the lingo of devoted market followers, this comprehensive yardstick of Big Board action finally offered "confirmation" of the Dow Average's extended climb when it etched its own mark in the record books.
Additional confirmation was provided by Standard & Poors 500 stock index, which similarly replaced a 5-month-old record with a new one.
Fence sitters have watched the arrows pointing higher and decided to jump into the market, sustaining the upward momentum, said Eugene Peroni of Janney Montgomery Scott Inc. in Philedelphia.
The vast number of investor wannabes--some drawn from the ranks of those disenchanted by the diminishing returns available on bonds and other interest rate-sensitive holdings--virtually guarantees that more money will pour into the stock market.
"We're far from the market reaching an overbought condition," Peroni said. "We're moving into the late stages of an advance, which are often the most dynamic."
Don't confuse dynamic with a rip-snorting dynamo, however.
Brett B. Sneed, senior vice president of Bull & Bear Group and vice-chairman of the company's investment policy committee, wasn't awed by the market's recent behavior.
"This is a temporary, bottom-fishing kind of bounce rather than the start of a major uptrend," he said.