…Or, how far will it fall?

But white rabbits jumping down a black hole may be the apt analogy.

Forget Nasdaq 5000, says Bill Meehan, chief market analyst at New York’s Cantor Fitzgerald LLP.

Mr. Meehan expects that within six months the tech-heavy index could see a 50% correction and drop as low as 2025.

Since October he has been advising investors to have no more than 50% in stocks with the rest in very short-term government notes or money markets.

“The ease with which people are brushing off what’s going on in the bond market, and what’s going on with the gold market, and just as easily dismiss the notion that buying value makes any sense at all is further evidence that we have a full-blown mania,” Mr. Meehan says.

Although the Nasdaq composite soared by 85.6% and Standard & Poor’s 500 stock index rose by nearly 20% last year, the market had more ups and downs than a Coney Island carnival ride and was fraught with much more risk.

More than half of the 6,179 common stocks tracked across all exchanges by Ned Davis Research Inc. of Venice, Fla., fell in value last year and Davis analyst Sam Burns says the median stock price finished down 4.1%.

“The arithmetic average is up 45% because of a few big gainers, but the median is more indicative of the market as a whole,” he says.

“It’s more of a split market than ever, historically. You kind of expect that when interest rates are going up, but not to this degree.”

The upshot is a wildly volatile market built on an extremely shaky foundation, two ingredients for a potentially explosive correction that could trigger a massive selloff — even a recession.

The Nasdaq has already had two 10% corrections and rallies this year, notes Mr. Burns. “Volatility is up considerably.”

The only missing element, according to bearish analysts, is a catalyst: perhaps a sudden, sharp decline in consumer confidence or too much tightening by the Federal Reserve.

A dramatic illustration of the growing disparity in the stock market is a comparison of the Nasdaq 100 index, which comprises the exchange’s biggest stocks, and the Value Line Composite index, an indicator of the broader overall market.

The Nasdaq 100, which includes most large tech stocks, is up 10.3% since the first of the year, while the Value Line index has fallen 3.1%. In contrast, the Nasdaq 100 rose 102% last year while the Value Line index was up only 10.6%.

While the tech-heavy Nasdaq has gotten most of the media attention, a closer look at the exchange shows a stark world of haves and have nots. Of the 4,798 stocks traded there, 2,491 finished up and 2,258 finished lower, according to a Nasdaq spokesman.

What’s going on?

John Abrahamson, a financial adviser at Sigma Investment Management in Portland, Ore., says there’s too much speculative fervor in the market and too many gung-ho Internet investors.

“In 1999,” says Mr. Abrahamson, “money-losing companies saw their stocks advance more than 50% on average, while the companies actually making money declined in price.”

Mr. Abrahamson says he’s not averse to investing in high-tech stocks; nor does he think Internet companies will disappear. Nevertheless, he says, “The market is decidedly lopsided right now. It’s like a stretched rubber band that’s ready to snap.”

After the bodies are counted, Cantor’s Mr. Meehan says those left standing will be more reasonably priced.

In the meantime he’s buying the “kind of stuff people are laughing about,” value companies that have growth rates in the 15% to 20% range a year and are selling at 10 or 11 times earnings.

Scott Brown, chief economist at Raymond James Financial Inc., also says a large correction — 30% or more — is possible this year.

Mr. Brown also believes that as the Federal Reserve continues to raise interest rates, technology will eventually slow down with the rest of the economy. “It’s tough to predict, though, when these things unravel.”

Alberto Vilar, president and portfolio manager of Lincoln, Neb.-based Amerindo Investment Advisors recently noted “a skewing of multiples in the market.”

Mr. Vilar, whose firm manages institutional portfolios exclusively invested in tech growth stocks, told a roundtable hosted by sister publication Pensions&Investments that the market could end up “going sideways” for the next few years.

Even so, he predicted that tech companies will make up 25% of the economy in the next five years.

Most companies whose stock dropped in value come not from the Internet or biotech industries — last year’s hot sectors — but from more traditional ones like retailing, health care and financial services.

Retailers like Tarrant Apparel Group, Novel Denim Holdings Ltd., North Face Inc., Restoration Hardware Inc., Bebe Stores Inc. and Wet Seal Inc. dot the landscape of companies trading at more than 65% off their 52-week highs as of Jan. 24, according to First Call.

Many health care companies like Zonagen Inc., Quadramed Corp. and Algos Pharmaceutical Corp., are in the same boat.

“Typically when interest rates go up stocks underperform, so the average stock has not done well,” says Mr. Burns. “It’s just that a few high-tech stocks have skyrocketed based on extremely high expected growth rates.”

It’s not time to start writing checks, however, say bearish analysts.

While some companies have justifiably seen their stock price plunge, the larger problem, insists analyst Ulric Weil of Friedman Billings Ramsey & Co. in Arlington, Va., is the market’s love affair with new companies, particularly those that are Internet related.

“Right now the virgins are being given the benefit of the doubt, while established companies — the veterans, so to speak — are being forgotten,” says Mr. Weil.

IMR Global, an 11-year-old Clearwater, Fla., company that provides applications software and outsourcing services, was trading at $9 last month, 69% off its 52-week high of $29 because of two announcements in the last four months that have lowered earnings expectations.

Joe Buttarazzi, senior analyst at Boston investment bank Adams Harkness & Hill Inc., isn’t surprised by the stock’s decline. He beilieves the company lost some profitability on some of the Y2K contracts it negotiated.

CyberCash Inc., the world’s largest online transaction processing company, is another established company gone cold in the eyes of investors. The firm, whose 52-week high was $24, was also trading around $9 last month.

“It started out as a great story in 1996,” says Mr. Weil, who covers the company, “but not all of their ideas have come to fruition.

“If you’ve been around a few years and seemingly things haven’t clicked, investors lose interest. They go for the latest craze.”

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