Dow 1,000: Is stage set for new surge or slump?

How high will the stock market climb -- the Dow Jones industrial average, that is? Above 1,500? Can it reach 2,000? Or will the Dow crest at its current level and head back to more familiar ground?

These questions are starting to crop up around Wall Street now that the Dow has meandered around the 1,000 mark for about a month.

According to Monte Gordon, director of research at the Dreyfus Corporation, a multibillion-dollar mutual fund, the fact the Dow has not sold off sharply at the 1,000 level is a positive sign. Mr. Gordon says: "The ability to stay above 1,000 removes a lot of the mystique about the number. The 1,000 mark is not larger than life anymore." He quickly adds, however, that "this isn't to say that it won't go back down again. But if it does, it won't be because it's at 1 ,000."

William LeFevre, a vice-president at Purcell, Graham & Co., a brokerage house , believes the "stage is set" for the market to resume its long march upward. He maintains that if the volume remains high, the Dow will rise "possibly to a new record above 1,051.70 maybe by the end of April."

Larry Wachtel of Bache Halsey Stuart Shields Inc. says that if it should rise to that level, he has one word of advice for investors: Sell. He says: "I'm always on my guard against everyone believing. . . . I recall in late January one of the oil analysts said there would be no problems in the oils anymore. [ Now the oils have problems.] It's the same thing here. What I fear is a spiral upward. I like a special-situations market."

Phil Roth, of E. F. Hutton & Co., is likewise skeptical about the market's rise, particularly about reading too much into the Dow's recent strength. He comments, "If all we were looking at was the short-term action of the Dow and the Dow were 'the market,' we could conclude the market was consolidating and that the consolidation should lead to another significant up-leg." Unfortunately , he observes, the recent strength in the market can be attributed to "short covering," that is, traders who thought the market would go lower, covering their short sales. This kind of buying, he says, is a sign of a market top.

Mr. Wachtel is also skeptical about analysts who talk about the Dow Jones average going to 1,500. "To talk about 1,500 on the Dow is academic," he states. "I must operate in the real world." In the real world, he notes, the market has traveled a long way since Feb. 27, when it was about 960, without a major correction. And, in a more sober light, he points out that the Dow has crossed the 1,000 mark now 21 times. "The adrenalin doesn't pump when it goes over 1,000 now," he adds.

It wouldn't be hard for the Dow to run up to its old high-water mark. The only weak segments of the average have been three oil stocks and Allied Chemical -- which some analysts now consider an oil stock. If OPEC were to meet and stabilize oil prices or cut production, these four stocks would soar and the Dow would probably crest above 1,051.

One possible obstacle for the market, Mr. Gordon notes, would be trouble in the Middle East. "If we're involved in the Middle East, it could divert President Reagan from the economy and we will lose ground. There could be a problem developing out there which will demand his attention."

President Reagan's decision to lift the grain embargo on sales to the Soviet Union should not cause grain prices to rise. At least that's the opinion of Dennis Dunn, president of Dunn & Hargitt, a commodity market advisory service. Mr. Dunn says that he expects "a little flurry" as the news is reported, but that by the end of next week prices will be either back to the same level or lower.

The weather is of more importance to the grain markets than the lifting of the embargo, Mr. Dunn says. If the Midwest has a lot of rain this spring, it will delay planting. If there is only limited rain, the subsoil will be too dry , hurting yields. "We'll need a good scheduling of rains," he says, "or there could be problems later."

Remember how much money Exxon Corporation made in the first quarter of 1980? It was easy to notice, because all the TV networks reported the oil giant's earnings. Last week, Exxon reported a 17 percent decline in its first-quarter earnings and it didn't make a single network newscast, according to the company.

Especially newsworthy was the fact that Exxon's earnings drop included a loss in its refining and marketing operations of $70 million. In 1980's first quarter, the refining and marketing operations made $118 million. This means Exxon was absorbing a lot of higher costs at the gasoline pump.

It was reporting lower earnings at the same time it was getting much higher prices for its domestically produced crude oil. According to the company, the average selling price for Exxon's crude oil was $15 a barrel higher than in the 1980 quarter. However, the windfall-profits tax and other taxes swallowed up 84 percent of this gain. As they might have said in TV land, "That's the way it was."

Wall Street got some good economic news last week and investors responded with a surge of buying. For the week the Dow Jones industrial average climbed 14.77 points, closing at 1,020.35. The good news included a much lower inflation rate, a strong economy in the first quarter (good for corporate profits), and falling crude oil prices. Shearson Loeb Rhoades Inc. was active and closed sharply higher after accepting a tender offer from American Express.