The

Dow Jones Industrial Average

is up by 20.9% since Sept. 21, and this has caused some commentators to declare a new bull market. It's hard to imagine something more helpful than knowing that the market has reversed its heretofore prevailing bearish trend, but the 20% standard is arbitrary and broader indices, such as the

S&P 500

, S&P 1500 SuperComposite and Wilshire 5000 fall short of that threshold. Not far short: Each is 19% higher than its Sept. 21 low -- which would raise the issue of how close is close enough if the 20% line had any real merit as a standard.

I don't want to get hung up in naming the parts. My own view is that prices are likely to trend higher from here over the months ahead and, for those like-minded, that's an operationally useful definition of a bull market. Unfortunately, what I think doesn't happen to be binding upon the market.

Another definition has it that a bear market exists as long as the index lies below its 200-day moving average while that average is itself declining. This situation still remains for all the widely followed major averages. But the rebounds from September lows have pushed each of these indices to within 2% to 6% of its 200-day moving average, and this performance, together with the passage of time, should cause the trend in the moving averages to move up within a matter of weeks. In short, the market is on the verge of breaking through, by this definition, into a new bull phase.

Two hundred days is, I suppose, just as arbitrary as 20%. But 20% can happen fast in volatile markets and can reverse itself just as quickly, whereas 200 days takes, well, longer than you can hold your breath or, maybe, your position.

There is a lot of baggage being dragged along in a 200-day moving average. We have learned hard lessons and been disabused of more than a few comfortable notions since Feb. 2, 2001. We were a lot younger then, and more innocent. The

Fed

had just started to ease, and the market had rallied enthusiastically in January. Consumer spending and housing were seen to be reliable bulwarks of strength, and Europe would contribute an element of stability. By Feb. 2, the

Nasdaq

was down 47% from its March 2000 high. Who knew that it would fall another 47% from there? Who knew that the events of Sept. 11 lay ahead?

The 200-day moving average is still falling, a fact that can be construed as an indication that the market is still coming to grips with and digesting the shocks and disappointments of 2001. In the absence of new shocks, the moving averages should turn higher, and the market then might be seen as having completed its adjustment process and moving on to new challenges and opportunities.

That 200-day tail represents a long trail of devastation in reported earnings; comparisons going forward will be much easier. The lagged effect of the Fed's 10 easing moves will be cresting. There may be some help from the federal budget. There is already at work a big boost to household and business budgets from the plunge in energy prices. Deflation is a concern much more in evidence lately than 200 days ago, but many commodity prices in November, away from the energy complex, have bounced hard and high, including industrial metals such as copper and aluminum, and fibers such as cotton.

Ten-year treasury yields have rebounded in the past two weeks almost all the way to the 5.15% level of Feb. 2, providing the same signal about that pit's view of the future as the metal traders have offered. The increase in these yields increases the ante on the 2002 economy to produce at least the 25%-plus recovery in earnings that appears to be today's expectation if an ongoing advance in market prices is sustained. Treasury notes and bonds are somewhat less dear than they were a month ago, but they continue to be less than compelling competition for the retirement saver's incremental dollar. And cash, which for the retirement investor should be seen as the risky asset, offers minimal attraction.

Searching for a Consensus

I can't identify a "consensus" at the present time; agnosticism reigns on the Street right now, it seems to me. A few seasoned strategists are wary of this market because they feel we've come too far too fast, and several of the Wall Street economists who have been bearish on the outlook remain so. But for each of these there is another who is much more constructive. There is a lot to like, but there is plenty still to worry about. To the extent that there has been movement from one camp to the other, however, by my reading it has been departures from the bears in favor of the bulls.

The nature and direction of risk have changed, it seems to me. Two hundred days ago we were still early in a postbubble adjustment process. (I sure wish I had been able then to discern that it was still early days.)

It's later now. A substantial economic adjustment has taken place, and the bear has done huge damage in the market. The Fed is unambiguous, unequivocal and unsubtle about its desire to get the economy moving through the intermediate means of financial asset markets. Lower yields have provided an opportunity for restructuring household and business balance sheets, and activity in mortgage and bond markets indicates that neither sector is letting the chance pass by. An

E Pluribus Unum

global coalition is hanging together remarkably well, with collateral benefits extending well beyond the heartening progress being registered in phase one of the war on terrorism.

Last, a ton of money is sitting on the sidelines, earning roughly a nil real yield and watching while these positive developments offer tentative indication of a change in trend. There is a special kind of risk, similar to that of a mudslide, now facing those who "time the market." Getting back in at the right time is at least as difficult as getting out in a timely fashion. When the 200-day moving average test says it's a new bull market, those who have called it already, on still thin evidence, will be far down the road to handsome returns.

Jim Griffin is the chief strategist at Hartford, Conn.-based Aeltus Investment Management, which manages institutional investment accounts and acts as adviser to the Aetna Mutual Funds. His commentary on the financial markets is based upon information thought to be reliable and is not meant as investment advice. While Griffin cannot provide investment advice or recommendations, he invites you to send comments on his column to

Jim Griffin.