Reply #14: Some Worry 1st-Quarter Stock Rally Is Over

[UpInArms]

http://news.yahoo.com/s/ap/20060410/ap_on_bi_ge/wall_street_week_ahead

NEW YORK - Wall Street's first-quarter rally could already be fizzling.

On a technical basis, the major indexes last week failed to meaningfully break out of their recent trading ranges. Yes, the Nasdaq composite index reached consecutive five-year highs on Wednesday and Thursday — and then gave it all back and then some Friday.

For the market's number crunchers, such "technical resistance" is a bad omen. And while discerning trends solely through trading averages can be akin to reading tea leaves, the fact that the major indexes have retreated off these highs is never a good sign.

As a practical matter, there's really no reason for investors to push stocks substantially higher. Last month's Federal Reserve statement on the economy was clear — rates will continue to rise, at least for one more session, and for as long as the economy shows strength. And the economic data back up that notion, as the economy appears to be growing at a solid pace, with more people getting jobs and buying power.

Investors would like to see slow growth, so rates remain stable and companies can borrow money to expand without worrying about higher interest costs. Lower rates would be good for consumers, too, especially those with credit card debt and adjustable-rate mortgages.

...more...