Wall Street rallied last week, bringing much-needed relief to investment-house front offices.
But the jury is still out on the market's staying power.
"We had some pretty good days last week," says Hildegard Zagorski, analyst at Prudential Securities. "Trading patterns were decent. Many corporate earnings reports were very strong. Until we find out otherwise, the market is now looking OK."
Major indexes rose, including the Dow Jones industrial average, the Nasdaq Composite, and the Standard & Poor's 500. The Dow rose 45 points Friday, capping a 310-pointnt gain on the week.
"What we had last week was a classic case of market retracement" says Don Hays, a market strategist at Wheat First Butcher Singer, in Richmond, Va.
The Dow has regained about half its losses since the end of March, when the index starting shedding about 10 percent.
Hays calls such retracement typical of most corrections.
That said, analysts here are quick to note that day-to-day indicators still flash mixed signals about the market's stability.
"The market looks somewhat encouraging now, but it is far from conclusive," says Arnold Kaufman, who edits "The Outlook" for Standard & Poor's.
New highs, for the past year, run about even with new lows, says Mr. Kaufman; that suggests ambivalence.
He also notes modest trading volume, and the Nasdaq's continued weakness.
The Nasdaq market emphasizes shares of smaller companies, and those shares have lost ground virtually the entire year.
Last Friday, for example, blue-chip issues rose steadily, but the high-tech sector, which dominates Nasdaq, hit a wall, despite recent gains for such firms as Microsoft, Intel, and Cisco Systems.
The market, says Kaufman, is "sluggish at best" and will likely test its recent lows - around 6380 for the Dow - soon.
If the market holds, he sees investors returning. If not, then indexes such as the Dow may head further south, he says.
Warning flags include a drop, compared to last year, in the money flowing into mutual funds.
Investors also have a low risk alternative US Treasury bonds, now yielding more than 7 percent.
That leaves many analysts wondering whether the market will regain last year's momentum anytime soon.
"The market is going to be in a very narrow trading band" for several months, says Scott Bleier, chief investment strategist at Prime Charter Ltd.
He advises investors to consider high quality, large company stocks, "companies that won't disappoint and that historically continue to grow and grow," even if that growth is modest.
He cites the pharmaceutical sector. A strong performer much of this year, the group is classically defensive, which means its shares hold up well when the rest of the market weakens. He sees good growth potential and stability.
Mr. Bleier expects the Dow to range between 6400 and 6750 through July.
This week, he says, should provide some breathing room. The US unemployment rate comes out Thursday, followed by reports on home sales and consumer sentiment Friday. He says he expects none of these reports to stir up financial markets.