Bulls and Bears Balance in a Wedge Technical Analysis Shows Narrowing Trading Range; Decision Point May Be Near Stock-market technicians, who use charts and mathematical formulas as well as historical stock moves to discern price trends, believe the Dow Jones Industrial Average is now in a "wedge pattern." It has nothing to do with football; instead it represents a narrowing trading range. In nontech-speak, this means the bulls and bears have come into balance and there is no telling yet who will win out. The industrial average last week soared to a 4½-year high in a New Year's rally that brought the average above 11000 points for several sessions. It pulled back below 11000 toward the end of last week before finishing at 10959.87, off 2.49 points, on Friday. Meanwhile, the Standard & Poor's 500-stock index has had a hard time passing above the key 1300 technical mark; the S&P 500 rose 1.55 points to 1287.61 on Friday. The Nasdaq Composite Index rose 0.35 point to 2317.04. "A drop-off in demand coupled with evidence the rally has become extended could be a combination that motivates enough profit-taking to stall the advance," said Richard Dickson, senior market strategist at Lowry's Reports, which focuses on technical research. According to Mr. Dickson, "a short-term drop in demand is hardly a trend, so any resulting pullback should only be an interruption and not a reversal of this move higher." The recent market rally hasn't come easily for many stocks. The percentage of stocks above their 10-day moving averages on the New York Stock Exchange matched its high of the past year, at 84% on Jan. 9. That suggests the majority of stocks have already enjoyed substantial moves higher and could be running out of steam. At the same time, indicators with slightly longer time horizons have yet to reach overbought levels, suggesting that, while there may be some near-term weakness in response to the very short-term overbought readings, the odds probably favor only a very minor correction followed by a resumption of the rally, Mr. Dickson said. He expects the Dow industrials to trade above 11000 and the S&P 500 above 1300 in coming weeks. Meanwhile, Richard Williams, chief technical analyst at ICAP, believes "we are at a potential top; this goes for both the Dow and S&P 500." One way or another, "we're going to do something big," Mr. Williams said. By a potential top, Mr. Williams means that the market is near a decision point. "But that point could be imminent," he said. As a result, the Dow's move above 11000 "was really just an attempt by the bulls to spook the bears into short-covering and that helped push the market up," Mr. Williams said. The longer-term direction of the market will be determined by whether the Dow has a sharp high volume move up or down from 11000, he said. He would give the bears the edge in the short run for reasons that include upside volume not being as strong as downside. Rick Bensignor, chief technical strategist at Morgan Stanley, likes the S&P 500 and thinks "we'll have a strong first quarter," despite the market being mildly overbought. He sees the 1300 level being reached but "it wouldn't be a surprise to then have a pullback to 1275, given how much the market has moved up since the year began." But that doesn't belie a move up in a significantly strong first quarter going into possibly the second, where the S&P 500 could reach 1345. Then Mr. Bensignor's charts suggest a 10% downside move to 1200 will likely occur. That sentiment is based on a combination of the current length of the bull market without a significant correction since October 2002, and "some of the models we look at that would be indicating the trend has exhausted itself somewhere in the mid-1300s level," Mr. Bensignor said. "Also, the market's breadth -- advancing stocks minus declining stock -- is not particularly favorable." interesting, WSJ usually does not shed much light on the technical side of the market