NEW YORK (CNN/Money) - With the market resplendent, with all the major indexes up by over 20 percent from their October lows, maybe it's time to think the rally in stocks isn't just a little rebound in the context of a long decline.
Maybe it's time to start saying that something new is happening.
"Some people have been reluctant to call this a bull market, because it's nothing like the 1990s," said Miller Tabak chief technical analyst Philip Roth. "But it is a bull market -- it's just nothing like the 1990s."
Monday, the Dow Jones industrial average briefly touched 9,000, a level it hasn't seen since last August, and the S&P 500 moved to its best close since July. The Nasdaq, unless it falls mightily, will finish the day Tuesday above its June 3 close of 1,562.56, putting it into the green for the past year.
Much as it led the way down, the Nasdaq has also been by far the best performing index on the way back up, tacking on 43 percent from its October low point. That the index has performed so well even as many Wall Streeters continue to lay crepe on tech is a sign that the market may be able to keep moving, thinks Raymond James market analyst Ralph Bloch.
"One of the ways you can tell when a trend is healthy is when tech stocks are leading," he said. "And when within tech, the semiconductor stocks are leading, you can basically dive into the pool without checking to see if there's water."
The Philadelphia Stock Exchanges semiconductor index is up nearly 75 percent from its October low.
The Nasdaq's bounceback, in particular, shows that the market has finally worked through many of the worries of the past year and signals a renewal of confidence.
"The psychology that led to the decline has been digested," said John Bollinger, head of Bollinger Capital.
Considering some of the heavy blows investors took over the past year, to say nothing of the two years that preceded it, the Nasdaq's resurgence is remarkable. This time last year the index was in the beginning stages of what would end up being a dizzying drop. The resignation of WorldCom CEO Bernie Ebbers on April 30 had signaled to the market that the rot in corporate boardrooms extended beyond the Enron scandal.
Through May, worries over WorldCom's financial position continued and, beginning in June, it became apparent that the company was fighting for survival. June 5 it announced a massive restructuring, June 20 it said it would delay some debt repayments, June 25 the company revealed that it had uncovered massive fraud. On July 21 it filed for bankruptcy.
WorldCom's unraveling was hell on the stock market, and hell on the Nasdaq in particular. The former telecom giant was a Nasdaq stock and Ebbers was seen as emblematic of late 1990s greed.
Furthermore, many Nasdaq companies made telecom equipment. Who were they going to sell to? By July 23, Nasdaq had slunk to 1,229.05, down a quarter from where it had been May 31 and down 37 percent on the year. There was a brief bounce, and then it was down again. On Oct. 9 the Nasdaq fell to 1,114.11, its lowest level since 1996 and 78 percent down from its all-time closing high of 5,048.62.
Gotta have a set back to make a come back
And then it started climbing. For a long time, that hardly seemed noteworthy. There were, as there are at any moment in the market, a scattering of people that thought stocks had made a major turning point, but mostly it looked like just one of those bounces that marked the Nasdaq's jagged march down from its 2000 highs. Big, yes, and swell for traders, but definitely not safe swimming for investors.
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But both Bloch and Bollinger believe that a shift has begun, and that the stock market's performance has begun to draw investors off the fence and into the market. Bloch points out that many retail investors bailed out of the market near the lows (his firm, Raymond James, has a large retail client base), and have been left to watch stocks rally as their money languished in cash accounts. Plenty of investors are probably fighting the urge to play catch-up ball.
Once the Dow clears 9,000 -- a level it hasn't closed above since Aug. 22 last year and that is now about 102 points away -- he thinks many investors will give in to that urge. The way to see if that's happened, he said, will be to watch stock market volume. If it is strong, that would be a very good sign.
"If this thing gets through 9,000 in a healthy fashion," he said, "there could be a lot more points."
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