Has the stock market rally that has seen the Standard & Poor’s 500 index climb 44% off the March 9, 2009 low ended the bear market that began in October 2007?

Or is the bear still fully in charge and the recent rally merely a typical bear market rally?

Deciding what to do now with your portfolio hinges on how you answer that question. If this is a new bull market, then you should be fully invested, no? But if it’s still a bear market, it’s no time to back off the conservative, cash-heavy stance of the last 18 months.

So which is it, bull or bear?

Unfortunately, I think the answer is: “Yes.” This is both a bull and a bear market, depending on what time period you choose for your analysis. That isn’t going to make anyone looking for a simple answer happy, but, hey, sometimes reality isn’t simple and investors who want to make money just have to deal with it.

So, let me explain how a market can simultaneously be a bull and a bear and give you a strategy for coping with that ambiguous reality.

Even though this market seems frustratingly complicated, it really isn’t that different from most stock markets.

Most stock markets are composed of two trends that live on different time lines. There’s what analysts call the secular trend, the long-term trend of stock prices over decades. And there’s the cyclical trend, which is shorter–lasting years instead of decades–and can move in the same or opposite direction from the secular trend.

For example, the bursting of the technology bubble and the collapse of stock prices in 2000 marked the end of a two-decade-long secular bull market. On March 6, 1978, the Standard & Poor’s 500 index was at 87.  For the next 22 years, the secular trend was up: The S&P 500 hit 1,527 on March 24, 2000.

During the 2000 market crash, many of us—myself included—thought we were seeing just a painful meltdown that would eventually lead to a resumption of the long move upward. And the rally from the post-crash low of 777 in the S&P 500 on October 9, 2002 to the October 9, 2007 high of 1565 seemed to confirm that view: The two-decade-long secular bull was back.

But the collapse of stock prices beginning in October 2007 said that maybe—probably—that view was wrong, or short-sighted, if you will.

The crash of 2000 was really the end of the secular bull and ushered in a secular bear market. Yes, the S&P did recover all its losses from the March 2000 high to the October 2007 peak—from 1527 to 1565. But it didn’t get significantly higher in 2007 than it had been in 2000.  And the NASDAQ Composite index, which peaked at 5049 in March 2000, managed to get back only to 2859 before starting down again.

Secular market trends go on and on and on. The secular bull that may have ended in March 2000 lasted for 22 years. The secular bear market of the Great Depression stretched for 25 years, from 1929 to 1954. That’s how long it took stocks, measured by the Dow Jones Industrial Average, to regain their 1929 highs.

The most recent secular bear market occurred from 1966 until 1982. Unlike the secular bear of the Great Depression, stocks didn’t plunge and plunge some more during these years. It was a period of largely sideways stock market moves, punctuated by the collapse in stock prices of 1973-1974.

These long-term trends aren’t smooth moves up or down. They’re characterized by breaks, countertrend moves that don’t last as long and move in the opposite direction. Analysts call these cyclical bulls and bears.

For example, the great secular bull market from 1978-2000 was punctuated by the 1987 stock market crash. That crash, in which the Dow Jones Industrials fell 508 points on October 19, 1987, didn’t derail the secular bull market, however. By September 1989, the Dow had recovered all the ground it had lost from the August 1987 highs.

That shows these shorter cyclical bulls and bears can go on for some time. The cyclical bear of 1987 lasted for two years. The cyclical bull of 2002-2007, if that is indeed what it was, went on for five years.

So, what should investors do now? I’m inclined to believe that we’re in a secular bear market that’s likely to be right up there with the worst in duration, although not the worst in the amount prices fell. We’re not looking at another Great Depression, but a replay of the sideways market of 1966-1982 is certainly possible.

Economic growth will probably be below trend. We’re likely to have major setbacks as stimulus packages wear off and economies slip back into recession before governments and central banks discover that the economic engines haven’t sputtered into sustained life. And huge deficits will help raise interest rates and keep the specter of inflation alive even in a slow-growth world.

That secular bear will be punctuated by cyclical bull rallies, of exactly the sort that we’re going through now. Those cyclical rallies may stretch on for years before failing as the overarching secular trend reasserts itself.

So, what do you do? I think the best strategy for this kind of market is to mix two proven tactics. Momentum strategies will work as long as you remain locked in to a sell strategy. The cyclical bull markets will yield substantial profits if you can catch them early and sell before they break. It’s not easy, but experienced momentum investors can make it work. 

Long-term value strategies will also work—if you mix your “buy and hold” with a strong dose of “buy when they’re cheap.” For this to work, you’ve got to be as tough as Warren Buffett was in his glory days when he would simply stop buying when stocks got too expensive. Then, the buy-and-hold value investor sits on cash, waiting for those long-term bargains that come along even in bear markets when everyone gets caught up in the panic of the day.

I’ve recently made two picks in Jubak’s Picks that embody the two ends of this strategy. I’ve bought Potash of Saskatchewan (POT) as a momentum play and am buying Microsoft (MSFT) as a value “buy and hold” play.

What you’re trying to accomplish with these two strategies isn’t any different from what you try to do in any market: using the psychology of your fellow investors to your advantage. In your momentum buys, you’re trying to profit from the market’s periodic swings toward over-enthusiasm. In your buy-and-hold value buys, you’re trying to profit from those excesses of despair that envelop individual stocks when investors shun them.

To profit from these swings, you have to be sure not to get caught up in them yourself. You have to be “in” the crowd yet not “of” the crowd. Not exactly the easiest way to make a profit.

Ah, for the days of a secular bull when all you had to do to profit was to go with the flow!