A new bull market? By one yardstick, it’s here

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By one classic measure, a new bull market has begun: At Monday’s close, the Standard & Poor’s 500 index was up more than 20% from its recent low -- the first 20%-plus advance in the index since the bear market began in October 2007.

But given financial markets’ trauma of the last three months, and the certain pain ahead for the economy, it’s understandable if many investors are unwilling to trust that the bear has breathed its last.

The S&P closed at 909.70 on Monday, up 3.8% for the day. Measured from its 11-year closing low of 752.44 on Nov. 20, the index was up 20.9%.

So far today, the S&P is holding on to most of Monday’s advance. It was down 12.23 points, or 1.3%, to 897.47 at about 10:40 a.m. PST.

Measuring bull- and bear-market start and end points can be more art than science. Many Wall Street pros have long used a 20% move in the S&P as a basic yardstick. But with the ridiculous volatility of the last year, this 20% snap-back -- in just 11 trading sessions -- could just be more of the same, with no staying power.

Among other major indexes, the Dow Jones industrial average on Monday was up 18.3% from its November low, lagging the S&P. The Nasdaq composite was up 19.4%. But the small-stock Russell 2,000 index was up 24.9%.

Some analysts say it just makes sense to wait for more confirmation that the rebound in stocks has legs.

Gail Dudack, a veteran market technician who heads Dudack Research Group in New York, says that, at best, ‘You can say that the bear market is losing its grip.’

But she notes that the S&P index remains far below its 200-day moving average, an important measure of its longer-term trend. The index would have to rise above 1,217 -- a 33.8% gain from Monday’s close -- to get back above the 200-day moving average.

Of course, waiting to buy until then would mean you’d leave a lot of money on the table. But this has been one vicious bear. No wonder many investors want to see it substantially weakened before getting back into the ring.

-- Tom Petruno