ALAN M. NEWMAN remembers sitting on his father's lap listening to tales about the great stock market crash of 1929.
His father, a broker who escaped the devastation, told him stories about investors leveraged to the hilt and going bust, about speculators losing fortunes, about bread lines and men selling apples on street corners.
Those stories sensitized Newman, a technical stock market analyst at HD Brous & Co., a Great Neck, N.Y.-based brokerage firm, to what can go wrong. Now, he is "running scared."
He believes that the bull market that has swept through most of the 1980s and 1990s is dead. "There is not a bull market," said Newman, 59. "We have built ourselves a mania."
Newman acknowledges that the popular indexes -- the Dow Jones industrial average, the Nasdaq composite index, and the Standard & Poor's 500 stock index -- scream bull market. But they are "a fraud," he says, because they are driven by a handful of big stocks.
He has come to this conclusion by comparing how many of the 9,300 stocks on the New York Stock Exchange and the Nasdaq stock market advance each week vs. those that decline. His figures are startling.
During the week of April 8, 1998, net advancing stocks totaled nearly 31,000 more than net declining stocks.
But since then, the broader market has plunged, and, during the week of Sept. 13, the net number of declining stocks overwhelmed net advancing stocks by 16,300.
"This is a perfect picture of a bear market already in progress," Newman recently wrote on his Web site.
Some experts disagree with Newman's advance/ decline theory. They argue that there is a natural downward bias to it because one day a stock may be up $3 a share, and the next four days it might be down a half a point.
But Newman says that the "evidence is kind of hard to fight with."
"What we have seen is more than just an ordinary decline, it is an absolute collapse," he said.
The increase in the number of stocks declining means that too few stocks are driving the market higher, Newman says. How long can Microsoft Corp., General Electric Co. and America Online Inc. take the market up?
"The list is growing narrower and narrower," he said. "What happens is these stocks have grown to such enormous size and it takes so much to support their size that more [money] has to be taken from the broad list."
Indeed, these stocks have become huge, and, in Newman's eyes, they are Hindenburgs ready to explode. "The time will come that they are just so bloated and so engorged that there is no amount of money that will keep them up. I expect to see them collapse of their own weight," he said. There are other signs that Newman sees that convinces him the bull market is over.
Margin debt, or money borrowed by investors from a brokerage to buy stocks, soared to $176 billion in August, up 19 percent from the same time a year earlier. Newman was recently at a neighborhood barbecue and one of his neighbors told him that he used money from a home equity loan to buy stocks.
"That is very much akin to what happened in 1929," he said. "People just took on extraordinary debt to buy stocks."
Another bearish sign is that 65 percent of the stocks traded on the New York Stock Exchange are selling below their 200-day moving average. "It shows the weakness throughout the broad list," he said. "This is not a vibrant market."
But Newman doesn't see a replay of 1929; rather, he expects a long, gut-churning 1970s-style collapse. "I think the Fed [Federal Reserve] will be there to catch a falling safe. They are not going to let the markets break down," he said. "One wonders whether the market is bigger than the Fed."
The sharp downturn Newman is predicting may have already begun, and it could accelerate in October, a volatile market month.
If that happens, the lessons he learned as a child will undoubtedly be passed on to many investors.
"It is quite conceivable that you will have a generation of investors swear off stocks just as they had then," Newman said.