Howard Kornblue loves the summer doldrums. While many investors went off on vacation, the manager of Pilgrim MagnaCap Fund was in his hot Phoenix office this week beefing up his $500 million portfolio with some overlooked stocks -- and even found some buys in market darlings such as Compaq Computer Corp.

"In the movie `Wall Street,' Michael Douglas says, `Greed is good,' " Kornblue chuckles. "Well, I say, boring is good."

The market has taken a break from the bipolar state that has enriched and depleted skittish investors by the minute all year. With everyone on vacation, it seems, except for a bunch of mildly active bulls, the market has been almost levitating, floating to new records.

The Dow Jones industrial average today gained 23.43, or 0.2 percent, closing at 11,209.84 -- an all-time high.

Both the Standard & Poor's 500-stock index and the Nasdaq composite index set records for a second day. Propelled by the crowning of Microsoft Corp. as the first corporation with a market value of $500 billion, the S&P 500 rose 9.16 points, or 0.7 percent, to 1418.78. The Nasdaq composite index rose 25.11, or 0.9 percent, to 2864.48.

"All the good earnings news we've expected has come to pass," said Richard McCabe, chief market strategist for Merrill Lynch. "And it's having a positive impact on the market."

Of the 113 S&P 500 companies that have reported second-quarter earnings so far, 75 topped expectations, First Call Corp. said. Typically, no more than half of the companies beat predictions.

Microsoft Corp. was the most active stock today and accounted for a third of the S&P's increase. It gained 5-1/16, to 99-7/16, and ended the day with a market value of $507.5 billion after announcing that it was considering forming a new stock to track its Internet business. The positive earnings news was expected to continue, with analysts estimating that the S&P 500 companies will post profit growth of 11.4 percent for the quarter -- the highest since the third quarter of 1997.

"We're living in the middle of history right now, with all this new technology," said Michael Holland, a New York money manager. "People are feeling good about where companies are going and are buying into those that are promising to pave the way for this new economy."

The records come at time when the market is typically thinned out, as people go on vacation and wait for the earnings news to shake out. Today, for example, 712 million shares traded on the New York Stock Exchange, compared with a three-month daily average of 781 million.

"It's summertime," Kornblue said. "And the market tends to get slower."

More importantly, there are more sellers summering than buyers in the office. For the week, the Dow average rose 0.1 percent, the S&P 500 1.1 percent, the Nasdaq 2.6 percent.

Some analysts worry this is the calm before the storm. Various measures of sentiment, in fact, are showing a high level of optimism, and complicated gauges used by people like McCabe reveal low levels of concern about market risk.

This, ironically, is bad news as far as McCabe is concerned.

"It worries me," McCabe said, rattling off complex stock-buying patterns that he said mirror the period before the stock market dove in October 1997. "People have no concern about downside risk, right now. It may fool them by going down. The market is vulnerable to weakness."

In the next month, he predicted, after people exhaust bargains in small stocks, the market could dip 10 percent to 15 percent, possibly slipping below 10,000. After a month or two, he estimates, it will rebound and continue "in the next phase of the bull market," topping 12,000 within a year.

The market has been rallying off and on for several months, continuing through an interest-rate increase. "A lot of the things unfolding in here have been factored in," Kornblue noted, "which is why market's been hitting new highs across the board."

Besides the traditional summer lulls, some analysts believe investors have backed off to wait and see if the Fed makes another move.

"People are going to be biting their nails until they see what the Fed does at the end of August and September," McCabe said. "Though, it's not expected, you never know."