It seems like several market lifetimes ago, but it's been less than a year since the

Dow Jones Industrial Average

closed above 9000 for the first time. On

April 6, the index finally eclipsed the once-elusive millennial level, ending at 9033.23.

Since the hallowed day (remember the "spectacular"

Dow 9000

special on

CNBC

?), the Dow has closed as low as 7539.07 on

Aug. 31 and as high as 9643.32 on

Jan. 8. Basically, while the U.S. economy has been humming along, the venerable index has gone nowhere slowly in the past 11 months, up just 2.7% as of

Wednesday's close.

Over the same time period, the

Nasdaq Composite Index

has moved up 23.8%, and the

S&P 500

has gained 9.5%. Moreover, the Dow lagged both averages for all of 1998 as well as 1997.

The Dow's limited exposure to technology stocks is one major reason it has lagged the S&P and Nasdaq. While technology now constitutes 21% of the S&P 500,

IBM

(IBM) - Get Report

and

Hewlett-Packard

(HWP)

are the only pure high-tech plays in the industrial average.

New era advocates say this relative underweighting in technology proves the Dow has become outdated, outmoded and obsolete. That view has become something of a truism on Wall Street in recent years.

But a number of market watchers (some admittedly with a vested interest) believe the Dow remains far more than just an indicator of market psychology.

"You can make the argument the Dow needs more tech, but the flip side is the S&P 500 probably overstates technology as far as its impact on the economy," says Chuck Carlson, contributing editor at

Dow Theory Forecasts

, which has no direct ties to

Dow Jones

(DJ)

. "The Dow includes cyclical stocks, and they have some weighting,

while the S&P is a market-cap-driven index and doesn't tell the whole picture."

Dow supporters believe that, rather than masking underlying weakness with an overemphasis on technology, the blue-chip proxy is doing a better job of reflecting what's really going on in the global marketplace -- specifically, struggles for both international economies and commodities.

"The U.S. economy has rolled merrily along while a lot of other economies are flat on their asses or trying to prevent themselves from getting there," says John Prestbo, editor of Dow Jones Indexes. "I submit the Dow is more reflective of the whole" than the S&P or Nasdaq.

U.S. economic strength has exceeded even the most optimistic forecasts, but "at the same time, the paper is full of layoffs everyday," Prestbo notes. "If that isn't a mixed bag, I don't know what is."

The Dow Jones executive argues that the average has a full complement of technology.

"I believe the Dow is reflective of the role technology has in the economy, but not -- I will agree -- of the role technology has in the marketplace, where it is the hottest thing since sliced bread," he says. "But when Wall Street talks about technology, they're almost always talking about computers. The tech sector really includes a much broader array of products and services. When I look at

Boeing

(BA) - Get Report

, I don't see a can-manufacturing plant. I see a company that tries to manage technology and turn it into hardware. It's the same thing at

3M

(MMM) - Get Report

."

Moreover, "we have added tech to the Dow in recent years, just not at the rate people who sell stocks would like us to," he says.

The last time Dow Jones revamped the index in March 1997, Hewlett-Packard was one of four new entrants. Changes to the index are "very subjective," Prestbo says, noting most alterations in the past 10 years have been the result of "some external event we must react to."

Asked if Hewlett-Packard's

announcement Tuesday that it will split into two publicly traded companies qualifies as such an event, Prestbo replied affirmatively. However, "many things are announced, while few are consummated," he adds. "We'll address it when it looks a little more real than it does at the moment."

Dow's Recent Performance Shines, Relatively

For those focused on performance (which Prestbo says is not the function of the Dow or any other index), advocates note the Dow has performed better in recent weeks as money rotated out of tech stocks and into some long-moribund cyclical names. Since Feb. 1, the Dow is down 0.7% while the S&P 500 is off 3.6% and the Nasdaq has lost 9.8%. Some market players see that trend continuing (see chart).

Steven Adler, president of

Vector Index Advisors

, notes the Dow as of Monday had a trailing price-to-earnings ratio of 23.7 vs. 32.8 for the S&P 500 and a dividend yield of 1.67 vs. the S&P's 1.33. "That to me is a conspicuous spread considering the Dow

components are part of the S&P 500. That means the rest of the pack has an even bigger spread," he says. "There's such a big difference it's yelling out there's going to be a change."

Until recently, Adler managed the Dow-tracking

(ASMUX)

ASM Index 30 fund. The fund is now being managed on an interim basis by

Orbitex Management

until shareholders vote on a proposal to have Orbitex officially assume responsibility, he says.

Regardless, Adler contends the Dow will enjoy a revival because it "survived" the international woes of last year. Additionally, mergers such as

Exxon

(XON) - Get Report

-

Mobil

(MOB)

mean "the big

investors who need liquidity will have fewer stocks to buy," he says.

Dow Doubters Persist

Still, many market participants contend the Dow is a fine gauge of 30 stocks, but little more.

"There are two main reasons why it's not a good indicator," says Diane Garnick, equity derivatives strategist at

Merrill Lynch

. "One, there's a huge emphasis on size. Second, more money is indexed to the S&P 500 than probably will ever be indexed to the Dow."

Garnick argues that the lack of interest in Dow options, which began trading on the

Chicago Board Options Exchange

last

October, is further evidence of the Dow's fall from grace.

Because institutions rarely use the Dow as a benchmark, "open interest on Dow options is next to none," she says. "Essentially, it's a failed product." She foresees far greater potential for the

Nasdaq 100 Shares

, a new depositary receipt product on the

Nasdaq 100 Index

slated to begin trading March 10.

As of Wednesday's open, open interest on Dow options totaled 256,857 vs. 2,033,624 for S&P 500 options, according to the exchange.

"We traded over 4 million contracts in 1998," says CBOE spokesman Michael Van Dam in defense of the Dow options. "I wouldn't call it not a success."