Where do we go from here? The Dow is dancing around the 1,050 level. And every time the bull looks tired it bellows again, sending investors back into the market. At these levels, however, only the nimblest of traders are making money as 40-point intraday swings become common. Last week the Dow Jones industrial average moved within a 40- to 50-point trading range before finally closing at 1039.92, a loss of 11.86 points.
To many analysts, this type of choppy market is a sign of winter gales. Larry Wachtel, an analyst for Prudential-Bache Securities, says that with investors so focused on the Federal Reserve's cutting its discount rate, he is a little concerned about what will happen once the rate is actually cut. Should the market not react positively, he believes it could be the start of a reaction that pulls down the Dow 100 points.
Over the longer term, he points out, the market is still riding a strong upward trend, and even a 100-point correction would not pull the rug out from under the bull.
He says the important thing to focus on is any improvement in the economy. Once it starts to expand again, probably shoving up interest rates, institutions are likely to become sellers, he says. Over the much longer term, ''we could see the Dow at 1,200 or 1,300. We are in a bull market like the 1960s.''
Richard McCabe, an analyst in the market research department, likewise believes the market may be reaching a temporary top. He cites a slew of technical indicators that show a maturing market.
Furthermore, he observes, the original market leaders, particularly the consumer growth stocks, appear to be losing their momentum and second-tier stocks are catching up. All of these signs lead him to believe the market may soon peak. He then looks for a four- to six-month consolidation phase before a resumption of the upward trend.
Joseph Barthel, a technical analyst with Butcher & Singer Inc., figures stocks are near the ''tail end of the first leg up in the bull market.'' He cites speculation by the public and stepped-up shorting by member firms and specialists as indications the market could be on the verge of a slide. But he points out that it's tough to pick the exact turn in a market. Thus, he thinks it may move even higher - possibly to 1,100 or 1,125 - before taking a four- to six-week plunge back to the 980 to 1,000 level. From this floor, he anticipates the market will build another leg up. He sees the Dow cresting at the 1,300 to 1 ,500 level within 18 months.