All of the good things that happened in the stock market this week weren't good enough.
Despite a string of mostly positive economic reports, strong retail earnings and a week-ending shock of good news for the housing market, stocks appear to be hitting a wall and could start moving sideways in the coming weeks.
The major averages all showed major improvement this week, with the Dow gaining more than 1.9%, the S&P 500 up nearly 2.7%, and the Nasdaq ahead more than 3.4%.
But the averages have been hitting the top of their 200-day moving averages and are having trouble breaking through. That was evident Friday, when stocks made little headway and closed flat.
All this indicates to analysts that the market may trade within a range that will be hard to break without even more good news surprises.
"I personally would start taking money off the table," says Dave Rovelli, managing director of US equity trading at Canaccord Adams of Boston. "I wouldn't chase the market after the move we've had with the resistance in front of you."
Rovelli watches the technological side of the market, and he sees opportunity there for investors seeking safe stock plays while Wall Street spins sideways. He likes Blackberry maker Research in Motion and iPhone and iPod manufacturer Apple as two companies carving out new niches in the market that have strong appeal.
But even with those two companies, he said he would only buy after their stock price has dropped, a play-the-dips strategy he advises with the broader market, which he doesn't see having much room to the upside.
"You would need a lot of volume and the volume isn't there," Rovelli says.
Among the most often-cited fears for the market ahead are skyrocketing oil, potentially more trouble for financial institutions, food inflation that is weighing on consumer spending and the lingering problems in the housing market.
On the positive side, the market did survive a busy news cycle and a strong surge up with only what appeared to be a modest sell-off Friday. Volatility, a hallmark of the market's slump that began last September, has all but vanished as the Chicago Board Options Exchange's Volatility Index has dropped to levels not seen since early October.
And there are some who believe better times are yet to come.
"What the market has to start with is some positive psychology and some momentum on the upside, and this was a very constructive weak for that," says Charles Massimo, president of CJM Fiscal Management. "You started to see a rash of money come into the market, though not nearly as much as I'd like to see for a full turnaround."
Playing the Market: Bonds, Bear Funds, Health Care
The hesitancy of the market to creep past resistance levels has investment advisors altering their strategies.
Dennis J. Barba, managing partner at The Oxford Group, is counseling municipal bonds as a safety measure until the markets can find a clear direction. Barba sees trouble ahead for the stock market as credit issues continue to wash through and housing continues to struggle.
"People are starting to get complacent again," Barba says. "My gut's telling me that the last week or 10 days people seem to have selective amnesia, forgetting what we've been going through since last September."
Other advisers are having their clients hedge on market weakness through fixed-income instruments like structured notes.
Kathy Boyle, president of Chapin Hill Advisors, likes those types of cash positions in times like these, while also advising clients toward exchange-traded funds and mutual funds that have both long and short positions on various aspects of the market.
Among those in that category are Diamond Hill Financial Long-Short Fund and the Prudent Bear Fund. Boyle thinks the overall market is headed for a double-bottom, despite the sentiment of some bulls riding the recent surge.
"I think that everybody's hoping that this is the end, but in my opinion there's going to be another shoe to drop," she says.
Michael Cohn, of Atlantis Asset Management, shares the bullish belief that the worst is over for the stock market, but a sustained rally will be tempered by the reality that the worst hasn't passed yet for the economy.
"I think we're going to be range-bound through the summer," Cohn says.
But Cohn says oil and food costs will continue to hamper market gains, with the recent round of stimulus checks sent to American taxpayers as doing little to ease the pain.
"The lion's share of those rebate checks are going to go into people's gas tanks and people's refrigerators," he says. "That does nothing to spur the economy."