Retest coming?

(MarketWatch) -- New bull market, or bear market rally?
That's the big debate currently, of course -- with a lot apparently riding on the right answer. But what if it doesn't make that much of a difference?
I ask because new bull markets often retest the lows of the bear markets that preceded them. That means that, even if a new bull market is now underway, it is not necessarily essential that you immediately increase your equity exposure.

Consider what happened after the 2000-2002 bear market came to an end on Oct. 9, 2002, at the 7,286 level on the Dow Jones Industrial Average . Over the next 49 calendar days, the Dow turned in a 23% rally. That's remarkably similar to the current rally, which as of Thursday night is 45 days old and in which the Dow has risen 22%.
But, following that 49-day rally in 2002, the Dow declined for a few months, in the process setting up a retest of its Oct. 9 low. By the subsequent March 11, for example, the Dow stood at 7,524, just 3.3% above the bear market low.
If the 2002-2003 script were to be followed today, the Dow would fall back in coming weeks to the 6,763 level.

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