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Updated with Dow's closing price.



) -- The

Dow Jones Industrial Average

stepped over the 10,000 mark Wednesday afternoon, prompting celebratory cheers on the floor of the

New York Stock Exchange

. Even the "Dow 10,000" hats, which first appeared when the Dow made its first trip above the 10,000 level on March 29, 1999, made a triumphant return.

Yes, 10 years ago we were at the same place we're at now. Mention that to buy-and-hold investors if you want to ruin their day. If you want to plunge the dagger deeper, remind them that just two weeks before Christmas in 2003, the Dow was in the same position fighting to 10,000 on the way up. (The Dow closed Wednesday at 10,015.86, up 144.80 points.)

It may seem hard to find a story on the stock market that doesn't sound overly bullish. After all, Dow 10,000 represents a major psychological point for retail investors, good for a remarkable 53% gain from the multiyear low set on March 6. But quite simply put: We've been there, done that. Market analysts find it hard to hang a hat on Dow 10,000, much less put on a party hat.

"Look how long ago it was that we first crossed above 10,000. That's where we are 10 years later," said Paul Mendelsohn, chief investment strategist with Windham Financial. "It appears to be an equilibrium point for the market, if anything. We came down to it, we overshot it to the downside and now we've come back to it."

In viewing Dow 10,000 as an equilibrium point, it's hard to get excited about today's news. Topping this type of psychological level is another positive in the minds of some retail investors, as it proves to be an accomplishment of a short-term goal. The last time the Dow closed above 10,000 was Oct. 3, 2008, less than three weeks after the collapse of Lehman Brothers, when the economic crisis took hold.

Unfortunately, the milestone doesn't matter to professional money managers still on the sidelines, ones who didn't chase the market higher to make sure their portfolio's performance didn't lag behind the market. "If institutions haven't come in below this, they're not going to come in now," Mendelsohn said. "It's not going to be the trigger that will make them come in. It'll actually create more fear."

That's not to say there haven't been improvements in the market since the Dow last traded above 10,000. A year ago, the advance read on third-quarter gross domestic product was -0.3%. The expectation now is for GDP to come in positive, indicating the end of the recession.

Manufacturing activity is also in an uptrend. Last October, the Institute for Supply Management's manufacturing index sported a reading of 43.5, an indication the sector was contracting. The index deteriorated further before rebounding to the most recent reading of 52.9 for August, indicating expansion in the manufacturing sector.

Consumer sentiment has improved remarkably in the last 11 months. When the Dow last traded above 10,000, the University of Michigan's consumer sentiment index had fallen to a reading of 57.5. The preliminary read for this month climbed to 70.2, quite an upswing from a year ago.

Still, despite an improvement in much of the economic data and a belief that a recovery is on the way, market observers warn of the risks that still remain even as the Dow tops the 10,000 level.

Robert Pavlik, chief investment strategist with Banyan Partners, agrees that institutions aren't waiting for the magic Dow 10,000 level before they step in. "There's still a lot of hesitancy on the part of many money managers out there," he said. "While I think it's small, there's a potential for a double-dip recession. We're still worried about the consumer and what levels unemployment will go to."

Given those uncertainties, one could even classify the Dow's current run to 10,000 as a major stretch. If the Dow is indeed a six-month forward indicator, it would be discounting growth for the next two quarters and expansion beyond. That makes some market watchers skeptical, given forecasts that unemployment will jump from where it is now at 9.7% to anywhere between 10% and 13% in 2010.

"You're going to have a good

third-quarterGDP number and you might be OK entering the fourth quarter, but what happens after that?" asks Windham Financial's Mendelsohn. "Have the markets really gone up because of the belief economic conditions are going to boom again or have they gone up because of the federal stimulus and the liquidity added by the

Federal Reserve

? We've been priming the pump, but I'm not so sure the pump is starting."

Where market analysts differ is on how retail investors should react to the Dow regaining the 10,000 mark again. Some argue that data on the U.S. labor market, such as the unemployment rate, are lagging indicators, that the housing sector is bottoming and that the economy will continue to move toward a recovery.

Banyan Partners' Pavlik says that retail investors don't see the Dow's rally as "real" because a lot of improvements in economic activity -- most notably the improvements in housing and manufacturing data -- haven't trickled down because the unemployment headlines continue to dominate. "They can't believe the stock market is rising," he said.

Pavlik notes that new orders are increasing steadily, durable goods orders are climbing, the housing situation appears to be bottoming and the ISM's services index, while not in expansion territory yet, has been steadily increasing since March and is below the growth indicator.

The changes in inventory levels are key to Pavlik's view that employment will improve. "A lot of people pass right over inventory levels, which are extremely low," he said. "Inventory

is going to have to be restocked, and that's going to require people."

While conventional wisdom says that small- to mid-cap companies rebound alongside an economic recovery, Pavlik is sticking with mid- to large-cap companies in the materials, information technology and consumer discretionary areas. "I want to stick with quality, well-regarded brand names," he said. "Those are the areas that will respond faster to an economic uptick."

Some of the more recognizable names Pavlik has on his watch list are Dow components

Home Depot

(HD) - Get Free Report



(DIS) - Get Free Report

. Although financials have relinquished the leadership position they held as the Dow rebounded from its March lows, Pavlik also sees value and more upside in

Bank of America

(BAC) - Get Free Report


JPMorgan Chase

(JPM) - Get Free Report

, even after Dow 10,000.

On the other hand, Dow 10,000 signals the start of another downturn for some. Windham Financial's Mendelsohn is in a camp that observes parallels between the position U.S. markets are in and what Japan's Nikkei 225 endured during a miserable 10-year stretch when it dropped from a high of nearly 39,000 to roughly 15,000.

"We're in a Japan scenario," Mendelsohn said. "I think our economy is basically going to be like Japan's. We acted very similarly. We brought our interest rates down to zero. We made sure our banks did not fail. We didn't clean up the problem with the bad loans. We swept it under the rug. Why should we be expecting a different outcome?"

Those who share Mendelsohn's view argue that the market simply cannot go back to trading as it did in the past. For them, it is very possible the next decade could resemble Japan's 10-year struggle, with the Dow stuck between 6000 and 10,000.

"For a short-term trader, this has worked. But for long-term people, this isn't over, and they may be better off on the sidelines," Mendelsohn said. "Getting to 10,000 is not an exciting point for me. It's the kiss of death."

-- Written by Robert Holmes in New York