The bull market is slowing, but forecasts for '84 are upbeat

The great bull market looks tired going into 1984, but analysts say they do not think it is ready to be put to pasture. Rather, the consensus is that the market will, if not charge, at least mosey ahead early this year as interest rates moderate. But later in the year, as credit becomes dearer and as investors hedge against a possible post-election swerve in the economy, the market is likely to begin a downturn.

Many investors have been heartened recently by good economic news, forecasts that the economy is not overheating and a belief that interest rates may dip. Though a year-end rally on the stock market failed to occur, the Dow Jones industrial average was ahead 8.13 points for the week, closing out the year at 1258,64.

Sparking optimism last week was the Commerce Department's index of leading economic indicators. It registered a 0.4 percent decline in November, the first decline since August 1982, when the stock market began to soar. The slowdown in economic activity that this gauged could make it less necessary for the Federal Reserve to tighten credit. This seemed especially the case when the index was taken together with continued moderation of inflation and the money supply.

But while the Fed may not now choose to tighten credit (by decreasing the amount of money in the banking system), the persistent federal deficit may keep the Fed from actually loosening credit. Lee H. Idleman, research director of the Dean Witter Reynolds brokerage firm, notes, moreover, that the November index of leading indicators could be revised upward just as the October index was. Thus the economy might be less expansive than before - but it is still far from contracting.

''Our view,'' says Mr. Idleman, ''is that the economy is slowing down, but that it still should have a gain (in the gross national product) of 5.2 percent in 1984. That is above the consensus.''

Mr. Idleman says it is possible interest rates will come down in the short run and that the market will move ahead early this year. He forecasts a 20 percent gain in the Dow Jones industrial average during 1984 and expects most of that to occur in the first six to nine months.

At Prudential-Bache in New York, chief strategist Fred Fraenkel has been talking down the idea that interest rates will moderate in early 1984. As a result, the Pru-Bache view, in contrast with the Dean Witter Reynolds view, is that the market will remain relatively undirected in the first half of 1984, but then could pick up later in the year. Pru-Bache analyst Hildegard Zagorski notes that this opposes the Wall Street consensus, and she admits that the firm's own technical research does indicate that ''January will be better'' than the past few weeks.

Anne E. Gregory, publisher of the Merrill Lynch Market Letter, points out that interest rates do not have a direct impact on the stock market: ''The one thing that drives the market is the anticipation of earnings. That is it.'' Interest rates, however, have an impact on corporate earnings. Higher rates decrease earnings.

Several technical factors, she notes, currently are bearish. These include the low cash-to-asset levels of institutions and fairly widespread negative sentiment among investment advisory services. But an important ''fundamental'' measure, she says, is bullish: the ratios of stock prices to earnings on Standard & Poor's 500 remain at healthy levels despite strong increases in stock prices since the bull market began in August 1982. Merrill Lynch analysts estimate the P/E multiples at 11.6 times 1983 earnings and 9.1 times projected earnings for 1984.

All other things (most importantly interest rates) being equal, the earnings one can achieve from the common stock of good, dependable companies could drive the market upward somewhat. But few analysts are willing to believe the market is ready to charge ahead this year.