NEW YORK, Jan 12: Stocks slipped in early-afternoon trading on Friday after Federal Reserve Chairman Alan Greenspan said there is still “significant” near-term risk in the economy.

The comments reignited fears the sputtering economy will limit corporate profit growth and stock prices after widespread optimism has sent tech shares surging more than 40 percent from their lows in September.

Stocks have scaled technical heights recently, but Wall Street chartists watching these bullish developments expect a flat market at best in the wake of the strong rally from September lows.

A best case scenario would be some kind of a trading range going forward, said Louise Yamada, head of technical research at Salomon Smith Barney. You’ve got a lot of work here to do and you’ve already seen a significant advance. I think the odds suggest we aren’t going a lot higher any time soon.

The Wall Street rally from 3-year lows in the fall in the wake of the devastating Sept. 11, attacks on the United States carried the tech-laden Nasdaq Composite up nearly 45 percent. The blue chip Dow Jones Industrial average and the broad Standard & Poor’s 500, gained more than 22 per cent and 19 per cent, respectively.

Yamada echoed remarks from other technical analysts, who focus on price action, volume and sentiment indicators to divine where stocks are likely to head next.

The majority of the V-type recovery for the stock market is now probably over, said Eugene Peroni, technical analyst at Nuveen Investments. We are now going to go into a bit of consolidation and a lateral channel in the short run.

One chart formation that caught attention is the 200-day average — a gauge plotting an index’s trend over the intermediate to long term. It is calculated by adding up the closing price of component stocks over the last 200 trading sessions and dividing the outcome by 200.

The rally pushed the Dow and S&P briefly above their respective 200-day moving averages, but the indexes late this week pulled back yet still straddle those levels. S&P crossed it on Jan. 4, while Dow jumped above it Dec. 6 for the first time since October 2000 and August 2001, respectively.

For the rally to get legs from here, the analysts say, the Dow and S&P would have to convincingly clear these 200-day averages — no easy feat given the massive overhead “resistance.” Resistance is a price level where sellers have emerged in bulk in the past, sending the gauges and component stocks lower.

For Nasdaq, initial resistance is 2,050 to 2,100 points but a much bigger obstacle remains at 2,300, or 250 points above its level on Friday. The Dow has to prove it can go significantly above its 200-day, which is at about 10,100 points now.—Reuters