Richard: I think it is clear that both the 2000-2002 and the 2007-2009 declines were primary bear markets. I think the important question is whether the period since 2000 has been a secular bull period or secular bear period. Remember, "secular" refers to whether PE's and valuations in general are increasing or decreasing, not just whether prices of stocks are rising or declining.
You state that you now believe that the 2007-2009 bear market was just an exceptionally severe correction, not a primary bear market. The "mini-bull" market high of 2007 ended up at a lower PE by far than the PE at the bull market high of 2000. The "min-bear" market low of 2009 produced a lower PE than the the bear market low of 2002. Thus, even though the market averages at the 2007 highs topped out above the market highs of 2000, we can still call the 2000-2007 period a secular bear market because these are defined by PE, not price. The rise and fall of valuations is what the classical Dow Theory called a "primary" bull or bear market, but the Dow Theory seemed to assume that valuation highs would correspond to price highs and valuation lows would correspond to price lows. Thus the mechanical signals given by price movements were assumed to have no possible conflict with valuation readings.
But we find at market extremes that there is some divergence between these two measurements, at least in terms of the cycle high and low points of each successive bull and bear market. Thus there is a need to distinguish between "primary" bull and bear price movements, and "secular" trends, which are based on PE ratios.
It appears that future peak of this mini-bull cycle has a chance to exceed the maximum PE of the 2007 market highs. If that happens, it will reveal that the secular bear market ended at the March 2009 lows.
I attempted to post the Case-Shiller S&P 500 PE Chart onto this blog but it would not fit. You can look at it at the following site: http://www.multpl.com/
The Unraveller
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