The stock market would seem to have...

The stock market would seem to have every reason to be depressed with the litany of negatives present, but it surprised everyone by rallying Monday, said Irving Katz, director of research at Thomas Green/San Diego Securities.

The question remains whether the rally can be sustained with the threat of war in the Middle East, which could result in inflationary forces on the economy, Katz said.

The only new high for the week was made by Lidak Pharmaceuticals at $11.125. The stock, which gained $1.875 to close at $10.625, has more than doubled since its initial public offering May 8 at $5 per unit.

Recently, the company announced that Genentech and a major European testing company would use Lidak’s unique mouse model to test drugs designed to block the growth of HIV, the virus responsible for AIDS.

Other good gainers for the week included Mail Boxes Etc., gaining $2.75 after a full-page favorable story in Investor’s Daily.

La Jolla Bancorp gained $1.50, to $11.50, as it became apparent that the takeover by Security Pacific should be completed next week. The merger calls for La Jolla Bancorp shareholders to receive .392157 shares of Security Pacific stock for each La Jolla Bancorp share.

At Security Pacific’s close Monday at $31.125, the swap is worth $12.40 for each share of La Jolla Bancorp stock. La Jolla Bancorp sweetened the deal Monday by declaring a cash and stock dividend worth an added $.44 per share.

Though not quite the $15 value originally expected, the combined $12.88 stock swap value is still a good multiple for La Jolla Bancorp’s $5.64 per share book value, Katz said.

Falling to new lows were Burnham Pacific Properties, $14.375; BSD Bancorp, $7.50; Wahlco Environmental, $8; First National, $15; Intermark, $5.375, and International Totalizator Systems, $3.625.

Cubic stock fell $1.375 for the week, to $16.50.