A bear market? Still hard to say `yes'

NEW YORK -- Wall Street's performance the past few weeks -- managing to put together a rally only to see it evaporate at the first sign of trouble -- begs the question: Can we say, finally, that we're in a bear market?

No, not yet.

It does seem that stocks have little if any reason to go up, and a plethora of reasons to fall. When it looked like interest rates were stabilizing in August, the market, having floundered for months, surged higher. Then when it became clear that earnings would fall short of expectations for the rest of 2000, stocks plunged.

Even this past week, Wall Street's first rally since Labor Day came to a quick end with disappointing results from Nortel Networks, the optical and wireless network equipment maker.

Yet while stocks are having a hard time holding on to gains -- and frankly, aren't expected to have much success in the coming weeks -- some analysts say the bears haven't taken over Wall Street.

"Right now, there's still a lot of confidence that stocks are the place to be long-term," said Larry Rice, chief investment officer at Josephthal & Co.

Rice nonetheless acknowledged the volatility that has sent various sectors and stocks alternately soaring and plunging. "What looks like a bear market today is a bull market tomorrow," he said, explaining that "we've been in a bear market in individual industries and individual securities."

Traditionally, a bear market occurs when stocks fall 20 percent over a sustained period of time. But a strict reliance on such measures doesn't lead to the conclusion that we're in an overall bear market. It's true that the Nasdaq Composite index is currently 35 percent below the closing high of 5,048.62 it hit on March 10, and so you might argue that the high-tech focused index is being dominated by bears. Still, the Nasdaq has bounced up and down during the past 7.5 months -- at one point, in mid-July, the Nasdaq was down only 15 percent from its record before it began dropping again.

Apply the 20 percent standard and the Dow Jones Industrial Average never even reached the bear level. The Dow was down 16 percent in March from its own closing high of 11,722.98, set Jan. 14, and now it's off just 9.6 percent.

And the index considered the best indicator of overall market performance, the Standard & Poor's 500, also never reached 20 percent -- just two months ago, the S&P came within seven points of its closing high of 1,527.46, set March 24. It's now down 9.7 percent from that milestone.

"You haven't had much of a correction in the Dow or some of the broader averages, but in some individual stocks, you've had huge bear markets," said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee.

Amazon.com peaked at $106.69 last December, fluctuated until early February and then fell below $85, or about 20 percent below its high, and stayed under that level. It closed Friday at $35.63, nearly 67 percent off its high. The Internet sector overall is certainly in a bear market. The Dow Jones Internet Composite Index is down more than 55 percent from its early March high, and for most of time since its peak, has been off more than 20 percent.

Berman noted that it's often not easy to tell if there's a bear market under way. In much the same way that economists can't always determine when a recession starts or ends until well after it's over, Wall Street professionals can't always say for sure when we're in a bear market.

But he and Rice both noted that one of the sure signs of a bear market -- a wholesale, sustained abandonment of stocks -- just hasn't happened yet.

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