Market firms slightly, but cautious tone visible

By Ronda Fears

Nashville, Tenn., June 4 - The market took a breather from its latest recent slide, firming a bit on Tuesday, but traders anticipate a further retreat amid a very cautious tone and suspicious sentiment.

Meanwhile, traders noted no gray market activity in the pending mandatory issues slated to price Thursday, which is not too unusual given the structure. But Nortel's deal was definitely stimulating the market as players tried to pin down valuation on the new deal.

"There was a lot going on today, and then there wasn't," said a convertible trader at one of the major investment banks.

"The trouble spots smoothed out a bit," the trader said, noting that Tyco, El Paso, Williams all leveled off or firmed slightly.

"People are tweaking positions," said Salomon Smith Barney convertible analyst Adrian Miller. "There are not any big moves going on."

Tyco's convertibles leveled off, edging up a bit with the stock regaining 72c to $16.77 but traders did not notice a lot of activity in the convertibles.

"There's so much uncertainty with the name, I'd just as soon take a step back and let the dust settle," Miller said.

"Regardless of what the put value is [on the convertibles], it's just not worth the effort to try to get in there now. I'd have an 'avoid' on these things. If you've already ridden this thing all the way down, would I go into a sell? I doubt it. If you hold it, hold on. But I wouldn't say buy in now."

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