DOW SKIRTS 10,000; MARKET'S FLIRTATION IS CAUTIOUS ONE.

Byline: Patricia Lamiell Associated Press 

The Dow Jones industrial average's flirtation with 10,000 this past week - and its repeated miss of the mark - provoked dark comparisons to the index's tortured crossing of a previous milestone, 1,000.

The Dow closed Friday at 9,903.55, down 94.07 for the day and still 96 points shy of an elusive close over 10,000. The blue chips made their first foray past 10,000 on Tuesday, and also traversed it Thursday and Friday.

In 1966, the index first breached 1,000 during intraday trading, but it backed off and didn't return to that level until 1968. Not until 1972 did it actually close above 1,000, but then the Dow slumped 45 percent over the next two years, and took until 1982 to hit the number again and stay there.

Richard McCabe, technical analyst at Merrill Lynch, points out that when the Dow crossed 7,000, 8,000 and 9,000, it pushed a little higher after each milestone and then quickly retreated between 9 percent and 18 percent.

``Crossing these nice, fancy, magical numbers is as often anticlimactic as it is the gateway to an extensive immediate further advance,'' McCabe said.

McCabe's main concern is that much like the rally in the early 1970s, which was dominated by what were called the Nifty 50 stocks, the present rally is too narrow.

So far this year, the Dow is up 7.87 percent. The S&P 500 index, which also comprises big-company stocks, is up 5.7 percent, but the Russell 2,000 index of medium-size companies is down 6 percent.

Illustrating the narrowness of the market's advance, researchers at Salomon Smith Barney note that over the past year, the top 10 performers in the S&P 500 accounted for nearly half the index's advance. And Merrill's McCabe has calculated that on 13 of the past 20 trading days, as the Dow charged toward 10,000, more issues declined than advanced on the New York Stock Exchange.

``Unless this changes rapidly, I'm afraid this foray above 10,000 is not going to be very long-lasting,'' McCabe said.

Arnold Kaufman, editor of Standard & Poor's weekly newsletter The Outlook, believes that while big companies can't continue to drive the market higher indefinitely, they can do so for a very long time.

Kaufman argues that big companies have more money to invest in the technological innovations that make them more efficient and profitable. In addition, as institutions and foreign investors have become bigger buyers of U.S. stocks, they purchase the most liquid, well-known names, and those tend to be bigger companies.