DOW-TING JONES

JOHN AIDAN BYRNE

October 1, 2006 -- Wall Street is ready to uncork the champagne.

The Dow Jones industrial average traded above its all-time closing high on consecutive days last week before giving back some of its gains to close within 43.31 of the mark.

Yet even if it scrapes past the record close of 11,722.98, set on Jan. 14, 2000, the gains will be narrowly spread across the widely-watched 30-stock index.

Maybe that's why the joy of the advancing Dow index was muted in many precincts up and down Wall Street - although not on CNBC, which gleefully broadcast the flirtation with the record close a full six hours before the closing bell.

"Twenty of the 30 Dow stocks are lower than they were five years ago, so what are people really celebrating?" asked an incredulous Craig Rothfeld, executive director of WJ Bonfanti. "the pom-pom cheerleading that's going on with the media on CNBC is a bit over the top and our entire trading room has remarked about it."

Robert Colby, author of The Encyclopedia of Market Indicators, notes that the five worst-performing blue chips in the Dow have been dragged down by economic fears, worries over housing, a PC sales slowdown, along with the scandal at giant insurer AIG.

"If the housing market slows down further, you might want to stay away from Home Depot, 3M and Alcoa," Colby says, naming three of the worst-performing Dow components this year. The other two are Intel and AIG.

"Wall Street fears that a slowdown in housing and economic growth could hurt their earnings going forward," he said.

Still, Colby, an investment strategist at TradingEducation.com, says that the rising Dow is a sign that investors "are feeling pretty good."

"Analysts are predicting double-digit earnings growth in the fourth quarter and maybe even in the first quarter of next year," he says.

Thursday night, after the Dow posted a record intra-day high, hundreds of traders celebrated with cocktails - and gathered at the swank New York Marriott Marquis for the Wings Over Wall Street fundraiser, which raised $1 million in pledges. Earlier in the day, NYSE Group President John Thain said the Dow is on the way up.

"We are optimistic that we will get a new record high, and as far as I am concerned, that'll be the news of the day," Thain said.

At his desk at Credit Suisse in New York, Viren Chandrasoma, the firm's U.S. head of program trading, said fear has started to leave the market.

"The market is picking up day after day and some people have to be invested," he said. "If you are managing money for equity funds, you can't afford to be on the sidelines with the market going up so much."

But Rothfeld is skeptical.

"Our thoughts are that this rally has occurred on relatively low volume and probably has more to do with marking up the end of the quarter than any underlying fundamentals that would cause people to cheer and celebrate."