WALL STREET Will the New Year's rally carry into the rest of '03?

Except for four times, since 1950, early January gains led to yearly advances.
NEW YORK (AP) -- Many on Wall Street cheered the recent New Year's rally, noting that early January gains historically bode well for the entire year. But the market's choppy trading in subsequent days might be more telling -- it reveals investors' doubts about the market's long-term outlook.
The Dow Jones industrial average posted its best performance for the first three days of a new year, surging nearly 432 points before it began lurching up and down for the rest of this past week. The overall gains raised hope of better prospects, though some analysts remained skeptical.
The January barometer, as it's known, dictates that if the first five days on average finish higher, then investors can expect gains for the month and entire year. Early January gains led to yearly advances each year since 1950, with the exception of four times, according to the Stock Trader's Almanac.
"It can be very misleading," said Richard A. Dickson, senior market strategist at Lowry's Research Reports. His firm found that although January gains often resulted in a yearly advance, the market also suffered sharp volatility at midyear, leading to a great deal of pain for investors.
Low activity
Dickson said more noteworthy were the weak volume and low participation in the past week from everyday investors, which signaled a lack of commitment to stocks and provided additional support for predictions of continued instability.
"A lot of people are sitting on the sidelines," he said. "It's a professional market, with short-term trading and hedge funds. That's why we're seeing violent moves to the upside and downside."
The market's three main gauges posted their second straight weekly advance Friday. Analysts, describing investors as seemingly more upbeat, believed the market's recent declines reflected profit-taking and a natural consolidation after a big rally.
"What's developing in the market is that investors are starting to look beyond the end of their noses," said Alfred E. Goldman, chief market strategist at A.G. Edwards & amp; Sons Inc. "I think investors' spirits will continue to improve."

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