The furor died as the market retreated, but Monday's early spike generated heated chatter about whether a "new bull market" was under way. To some, that kind of optimistic thinking indicates sentiment remains too bullish to sustain an advance.

But the debate over whether a bull market is imminent will rise again the next time the market rallies.

And that raises these questions: What makes a bull market (defined simply and generally here as a prolonged, sustained advance)? And how can you tell when one has arrived?

"Bull markets are defined by whomever the definer is," said Jeffrey Hirsch, publisher of

The Stock Traders' Almanac

, explaining why some observers measure the "superbull cycle" that ended in 2000 as having started as far back as 1974, while others use 1982 or October 1990 as the starting point. "It's part of the elusive nature of the bull-bear debate."

Some of the commonly used definitions of a bull move include an index being above its 200-day moving average, as discussed

here, confirmation from the Dow Transports (aka "Dow Theory"), a clear positive trend in cumulative market breadth, and the tried-and-true "20% rally off a low."

Using the 20% guideline, there have been a handful of "bull markets" since major averages topped in early 2000. Yet the

Dow Jones Industrial Average

remains nearly 30% off its January 2000 high, while the

S&P 500

is more than 42% below its March 2000 peak and the

Nasdaq Composite

more than 72% below its apex that same month. Few investors would dub that a bull market by any definition.

Rather than the 20% rule, which relies solely on price action, Hirsch prefers the bull market parameters established by Ned Davis Research, which are a 13% Dow advance in 155 calendar days, or a 30% rally in 50 calendar days. A 30% move in the Value Line Geometric Index also qualifies.

After hitting a closing low of 7286.27 on Oct. 9, the Dow is up 13.9% after Tuesday's close, 181 days later. Thus, by Ned Davis Research's definition, this


a new bull market, after all.

Ned Davis -- the man or the firm -- couldn't be reached for comment/confirmation. Regardless, I suspect most readers would vehemently disagree that a new bull market is under way.

Many technicians won't accept that the bear market is over until, at minimum, the S&P 500 eclipses 965. That was the index's intraday high on Aug. 22 and also represents the neckline of a bearish "head and shoulders" pattern going back to the 1998 lows -- with the March 2000 peak being the head.

"A failure to break above this level post-Iraq will be a missed opportunity to improve the big picture for the market," said Phil Erlanger, editor of

Erlanger's Squeeze Play


On a related note, "the thing the market has not done in three years is take out a prior rally high," said Nick Moore, a portfolio manager at Jurika & Voyles, an Oakland, Calif.-based firm with more than $1 billion under management. "So really the thing that matters is getting

the S&P higher than 965."

TheStreet Recommends

Given that 965 is nearly 10% above Tuesday's close, Moore said the quandary for many is risking "missing most or all of the biggest rally for the year" while awaiting confirmation of a bull move.

Then you get to the issue of sustainability, which Erlanger mentioned: Assuming any "post-war celebration" is enough to eclipse 965, "the risk is that shorts will be minimal and mutual fund cash levels virtually depleted," he wrote. "Without the 'buying power' of shorts covering and cash entering into the market, sustained strength is highly questionable."

New Bull Market or Same-Old B.S.?
A five-year chart of the S&P 500 shows
resistance at 965 following a long slide

Ironically, a former chart reader offered a more fundamental definition of what makes a bull market.

"In the clearest sense, you need fundamental power," said Brian Belski, fundamental market strategist at U.S. Bancorp Piper Jaffray in Minneapolis. "You need sales growth and pricing power, and operating margin expansion and earnings growth."

Corporate earnings have risen -- the government reported corporate profits rose in the fourth quarter for the first time since 2001's final stanza -- but "it's been manufactured through cost-cutting and the like," Belski said. "You haven't seen strong and sustainable sales growth

while operating margins continue to dwindle because there's no pricing power."

The only sectors offering evidence of all four "clear, fundamental principles" are health care and consumer staples, he said. Not surprisingly, Belski currently recommends overweighting those areas.

Although unconvinced a new bull market is at hand, the strategist does not believe the bear market remains intact.

"It's a lithium market," he quipped, "emotional in nature" but "net-net" proves to be

flat over a long period of time.

"The longer we have this bull-bear argument, the longer we'll have this trading range," Belski said. "The market doesn't have to be either" bull or bear.

Making the (Bull) Case

Naturally, cynicism about the possibility of a "new bull market" makes some say its occurrence is more likely, or that it's already happening unbeknownst to most.

The notion that "most people today are not very optimistic" is one reason Kenneth Fisher, CEO of Woodside, Calif.-based Fisher Investments, remains upbeat about equities, although admittedly uncertain whether a new bull market has begun.

Fisher, whose firm oversees about $10 billion, cited several other factors to justify optimism, including:

A belief interest rates will remain lower for longer than most participants expect, in part because the global economy will remain weak and in part because of a belief Alan Greenspan wants to be reappointed to another term as Federal Reserve chairman. "We believe Greenspan doesn't have much choice but to be loose," nor do central banks in Europe and Japan, Fisher said.

With short-term rates remaining low, Fisher expects the Fed to ultimately employ its Open Market Operations at the longer end of the yield curve rather than the short end, which "injects liquidity directly into capital markets." He characterized such a development as unexpected, rather than an "emergency measure."

A belief there's a "silver lining" in underfunded pension funds; namely that significant amounts of money put into such plans will find their way into equities. (Fisher recently wrote about this in detail for Forbes.)

The S&P 500's earnings yield -- the inverse of the price-to-earnings ratio -- is higher than 10-year Treasury yields, commonly known as the Fed Model.

The S&P's median price-to-sales ratio being 1.15, the same as in 1975 and 1958.

"Put that together with a world where geopolitical uncertainty

presumably goes away as the year moves along, with more traditional political cycles," and we just might have a bull market on our hands, Fisher said.

That said, the money manager admitted, "I've been too optimistic for a long time" -- nearly a year now -- "so I might be wrong."

Indeed, the onus remains on the optimists to prove a new bull market is likely -- certainly that a bull market has already begun.

Aaron L. Task writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

Aaron L. Task.