"Perchance he for whom this bell tolls may be so ill, as that he knows not it tolls for him." - John Donne, 1623.

It is said that no one rings a bell when something major is about to happen on the stock market. Maybe so, but something akin to that may have happened last Tuesday when Toll Brothers Inc., a luxury home builder, cut its earnings guidance for the current fiscal year. The company said orders rose only 1% in its fiscal fourth quarter ended October 31. Some analysts expected an increase of 22%.

The curious thing about this announcement is that Chief Executive, Mr. Robert Toll, had been busy promoting a bullish outlook for home builders for the last six months even as he was selling shares of his own stock. He was not alone in this endeavor. Several of his home building colleagues also appeared on TV outlining grandiose plans for robust growth for years to come. How could they? Have they not heard that the consumer is being tapped out? Interest rates have been rising and the "housing bubble" is about to burst?

Of course they have, over and over again. Yet they have forged ahead, making more and more money each year. So why should it be any different this time? I don't know. But why did Mr. Toll sell so much of his own stock? Perhaps he knows For Whom the Bell Tolls.

THURSDAY'S RALLY.
With news of a $66.1 billion September trade deficit, the market opened on a sour note Thursday and muddled through the morning. Stock prices rose sharply in the afternoon, however, after the last leg of the government's $44 billion bond auction appeared to draw record demand from foreign central banks. Why was this so important?

Concern has been growing that foreign investors may begin backing away from funding America's voracious spending appetite. Foreign demand has been the major reason for keeping bond yields low. Should this source of money dry up, long-term interest rates would rise sharply. High interest rates would raise mortgage rates, reduce the sales of new homes and weaken the economy. A weak economy would lead to lower corporate earnings and a bear market.

So evidence that foreigners were still stashing their money away in U.S. bonds was good news for the stock market, triggering Thursday's Rally.