Bull markets don't need reasons to go up. They just go up. ''They may need an idea,'' commented Hildegard Zagorski, an assistant vice-president at Bache Halsey Stuart Shields Inc., a brokerage house, ''but they don't need any overt reason.''
This was so last week, when the Dow Jones industrial average soared 29.53 points, closing at 1,076.07, a new record, in a powerful surge. Buying broadened out to smokestack issues, such as steels and aluminums. The market's intensity nearly became frantic as investors eager to get on the bandwagon bought stocks.
Even though there was no hard evidence the economy as a whole was turning, expectation of such a turn was the main ''idea'' analysts cited for the rise.
''If the market is a discounting mechanism,'' said Dick Yashewski of Butcher & Singer, a Philadelphia brokerage, ''then it's saying a sharp revival is not too far away.'' Some brokers said they expected the economy to snap back faster and sooner than originally expected. This prompted heavy buying of the smokestacks.
But Larry Wachtel, vice-president for research at Bache Halsey Stuart Shields Inc., another brokerage, says he sees no change in the fundamentals. ''The economy is no great shakes, although there has been some improvement in the autos and housing sectors,'' he commented. And, in fact, the government reported Friday that the unemployment rate had edged up to 10.8 percent, from a revised 10.7 percent in November, another sign the economy remained weak.
Analysts also said they expected the Federal Reserve Board to cut the discount rate, the rate the bank lends money to its member banks, from 81/2 to 8 percent, or possibly even 71/2 percent. The early August-October rally was stimulated by expecations of sharply lower interest rates.
There are other things behind the0surge. The public became more interested in the stock market as it crested the 1,000 level and remained there. Partial evidence of the public's interest comes in a huge volume of new mutual fund sales. The Investment Company Institute reports new sales of aggressive growth funds swelled 45.8 percent last year. Stockbrokers also say general interest in the market itself has climbed. Edwin Hadley, senior vice-president at Shearson/American Express, in Chatham, N.J., said, ''Our phones are a lot busier as the market has come alive.''
Richard J. Hoffman, chief investment strategist for Merrill Lynch & Co., says this type of market behavior - with wide swings - doesn't surprise him. He commented that ''1982 was volatile, and 1983 will be as well.''
Even though investors started off 1983 with a bang, Mr. Hoffman believes their spirits will both soar and sag this year. ''There will be some euphoria and some gloom,'' he said, ''but by year-end it should be a pretty good year.''
He expects concern will begin to develop around midyear, when some analysts will being to says the economic recovery is going to abort. Prompting this concern will be the possibility the huge federal deficit will crowd private borrowers out of the debt markets. At the same time, Mr. Hoffman expects the US dollar to weaken dramatically, which should contribute to the inflation rate. The current-accounts balance will continue to weaken, which will keep pressure on the dollar. Although he expects imports to rise considerably in 1983, as the rising US economy draws in foreign goods, he doesn't expect any protectionist legislation - just lots of rhetoric.
Although interest rates will rise, Mr. Hoffman says they will not hit new highs, as some analysts predict. Rising corporate profits will provide more capital so companies will not need to borrow so much, thus tempering interest rates. This will allow the fiscal 1984 deficit to be reduced relative to expectations, he comments, ''and will allow interest rates to fall as we get near the end of'' in 1983.
Investors' reaction to these concerns will cause ''choppy'' markets and increased volatility. Initially, Mr. Hoffman predicts, the stock market - as measured by the Dow - will be in a 950-to-1,070 range. But later he expects an upside breakout to the 1,200 level as the economy begins to come back. At midyear, when investors begin to think the recovery may abort, the market should correct to 1,000 before running back up to 1,200 by year-end, as investors begin to hope for a stronger recovery in 1984, an election year.
Hoffman believes investors' best returns will be in companies whose main products increase productivity. Thus, he likes those in both the hardware and software aspect of computers, as well as instrument manufacturing.
shares, such as Intergraph. Throughout the market's move, he anticipates consumer growth stocks will do well.