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CALENDAR WATCHERS SEE GOOD, BAD IN MARKET CYCLE

People who watch the stock market for calendar patterns are simultaneously delighted and worried over the way things have been going lately on Wall Street.

The market's rise through the first quarter of 1995 buttressed their hopes based on the historical guidepost known as the "political stock market cycle."At the same time, however, analysts warn that the market now is heading into the season of the year that has often been its most dif-fi-cult.

The strong start for stock prices so far fits well with the market's past penchant for enjoying some of its greatest prosperity in the years leading up to and coinciding with presidential elections.

In the last pre-election year, 1991, the market had its best showing so far in this decade, rolling up a 26.3 percent gain in the Standard & Poor's 500-stock composite index.

Analysts argue that this sort of pre-election behavior makes sense, if you assume that investors anticipate measures to stimulate the economy, and similar policy goodies, before the voters go to the polls.

Indeed, it can easily be argued that today's stock buyers have had their appetites whetted by politics - proposals to cut capital gains taxes and otherwise stimulate investment.

A more tenuous pattern also gets support from the market's good showing so far this year: An interrupted string, widely noted on the Street, of gains in all recent years ending with the numeral 5. For the S&P 500, 1985 was up 26 percent; 1975 31 percent, 1965 9 percent, and 1955 26 percent.

"Maybe we should have been prepared for good times," suggests Byron Wien at the investment firm of Morgan Stanley & Co. "Years ending in 5 have been up throughout the century without exception.

"But just about everyone, including myself, is suspicious of mechanical correlations," Wien adds. "We need sound fundamental reasons for being optimistic."

The logical underpinning for the early-1995 rally has been provided by rising prices and falling interest rates in the bond market, which suffered through a rocky 1994.

Now, quite a few observers wonder if bonds aren't due for a period of retrenchment, or at least a rest, after their recent burst of strength.

If that induced a leveling off or pullback in the stock market too, well, that would tend to fit with a calendar pattern as well.

Yale Hirsch, publisher of the annual Stock Trader's Almanac, reports that the stock market has done much of its climbing since 1950 in the six months from November through April, and very little of it in the other half of the year, running from May through October.

"We are almost through the most favorable half of the year," Hirsch says in his newsletter Ground Floor. "Not that the market has to follow our schedule," he adds, but "it's time for a pause in the advance."

Says Wien, "It is my view that the market will settle down and consolidate for a while. I don't expect a sharp selloff, although clearly one is possible, and I also don't expect a bear market to begin, although the chances of that happening are at least one in five."

He adds, "equity returns have been compounding near 15 percent since the early 1980s, and that's a long time for things to have been going so well.

"All of this doesn't mean the market has to go down, but it does suggest the buying power to drive equities to my 1995 target of Dow Jones 4,500 may not be present."