It is what one analyst calls ``an eerie parallel.''

Chart the percentage rise and fall of the Nasdaq composite index over the past two years on the same graph as the Dow Jones industrial average in 1929 and, bingo! They look uncomfortably similar. Both graphs soar to a sharp peak, then break and fall, before bouncing down like a boulder on a mountainside.

After the 1929 crash, the Dow kept dropping one year longer, for a third year. Will the Nasdaq composite index follow? Will the broader stock indexes do likewise?

``No question about it,'' predicts Tony Kolton, president of markethistory.com, a Web site analyzing historical stock performance. ``We're in the real eye of the tornado. The down move is about to accelerate precipitously. We're in early 1932, and the market didn't bottom until July 1932.''

Not so fast, say other investment professionals. The differences between the 1930s market and the Nasdaq plunge are so huge that the comparison is wildly simplistic. The Dow, for example, made up the heart of the U.S. economy in the 1920s, whereas the Nasdaq reflects mainly one sector -- technology.

Also, the economy is entirely different now, with stricter regulation, a safety net of benefits and loose monetary policy providing stimulation after the tech crash. Moreover, the two indexes are mathematically different -- the Dow is calculated based on share prices, not company market values as the Nasdaq is.

Ken Fisher, chairman of Fisher Investments in Woodside, says the analogy with the 1930s is ``delusional.''

So how does he explain the similarity of charts?

Coincidence. ``A lot of women look like Marilyn Monroe but they can't act,'' he says.

Place your bets, ladies and gentlemen. The wheel is spinning, and soon the truth will be revealed.

Bearish experts bring up the Great Crash whenever the stock market begins to accelerate wildly. In the past, they have matched the 1929 Dow with Japan's Nikkei during its late 1980s bubble market, the Dow's run-up and crash in 1987, and the bubble in gold prices in the late 1970s. They say patterns repeat because the psychology of fear, hope and greed change the market's balance between supply and demand in a predictable way.

With the current decline, fear hasn't become bad enough to drive enough investors out of the market to create the long-sought bottom, the bears say. Once these investors have sold their stocks, they will become the new buyers who can start driving up prices when confidence recovers.

``Anyone who is holding for the long term owns as much stock as they're willing to buy,'' says Jerry Wang, market strategist at Schaeffer's Investment Research in Cincinnati. ``Their next action will be to sell.''

Look out below
• Too much optimism is a negative, bears say

According to this scenario, sellers will fuel the next downward move as the broader stock indexes follow Nasdaq's decline. How far?

Probably not the full 89 percent decline of the 1929 Dow, but quite possibly an additional 30 percent or so. Schaeffer's research firm -- among the most respected of those that use investor sentiment as part of its method to predict the market -- is expecting the Dow to hit 6,000 and the S&P 500 to wind up at exactly that, 500.

Nasdaq? It could bottom at about 800.

``We're only beginning to see the retrenchment of the popping of the bubble,'' says Jim Stack, president of InvesTech Research.

He is concerned the stock market's weakness reflects a deep malaise in the economy. ``The whole retrenchment process defies prediction,'' he says.

Despite their recent popularity, bears are still in the minority on Wall Street. A Merrill Lynch survey of Wall Street strategists shows that the average brokerage firm strategist remains stubbornly bullish: They are recommending investors allocate 68 percent of their money to stocks and 24 percent to bonds, with the rest in cash. This is less weighted toward stocks than in early 2001 but is still high.

Many of these optimists believe the current bearishness makes a rally much more likely. The economy remains fundamentally sound, with low inflation, low interest rates, a weak but sustained recovery and improving operating margins for companies. When investors realize this, they will quickly move back from bonds into stocks, driving up stock prices.

Is it possible both bears and bulls are right?

Yes, and here's why.

Roller-coaster market
• Sharp rallies, declines dueled from '29 to '49

Even if the Nasdaq follows the pattern of the Dow after the 1929 crash, the coming months will not bring one long, money-losing decline. Instead, get ready for a roller coaster punctuated by sharp mini-bull markets.

``There are going to be some ferocious rallies,'' says Jim Shepherd, president of Shepherd Capital Management in Spokane, Wash., who accurately forecast the 1987 crash and is watching for an indication of another crash.

In fact, the 1929 crash only marked the first phase of an alternating series of bear and bull markets that stretched over 20 years. After falling 48 percent over two months during the crash, the 1929 Dow launched into a swift rally for five months.

After falling in March through May 2000, the Nasdaq had its own rally. It regained 1,100 points by July 17, and stood 18 percent away from its earlier record.

In both cases, business looked as if it was resuming as before. However, in 1930, the Dow began a second, crushing decline. When it was over, the Dow hit its real Depression bottom at 41.22 on July 8, 1932 -- an 89 percent decline from its 1929 peak.

Despite the wider problems of the Great Depression, stock investors did well over the next five years, as the Dow launched into a second bull market. If you had invested $1,000 in the 30 Dow stocks evenly at the 1932 bottom, it would have risen to $4,730 on price appreciation alone by March 10, 1937.

With the onset of World War II, a third bear market erased nearly $2,500 of these gains by 1942. On June 13, 1949, the Dow stood at 161.60 -- still 57 percent below its 1929 peak. An investor caught up in the excitement of the 1929 market would have lost almost half of his or her original investment in spite of holding on for 20 years.

What will happen?
• `The next 60 days will tell it all'

Is this what is in store for technology investors caught up in the Internet bubble in early 2000? Is it possible that the Nasdaq will stand at 2,170 in the year 2020, amounting to less than a 3 percent annual increase in its price level?

The economy holds the key.

Further declines are not likely in a growing economy, only in a stagnating one. ``We've been correcting extreme optimism in the market, but the economy is on better footing,'' says Tim Hayes, global market strategist for Ned Davis Research, one of the firms that has compared the 1929 Dow to the 2000 Nasdaq.

To prevent a persistent slump, the Federal Reserve has cut interest rates faster than any time in U.S. history and increased money supply. In comparison, the 1930s Fed acted too slowly, as did the Japanese central bank in the 1990s.

The federal government has now launched into deficit spending for its military build-up after Sept. 11 that also should stimulate the economy.

So far, there is no parallel between the dire economic conditions in 1932 and now. This seesaw fight between the sagging stock prices and the economic growth is likely to remain the key battleground in determining what lies next.

``The next 60 days will tell it all,'' says Stack of InvesTech Research.