Things are looking good these days for Potomac's Dan Veatch. He won the 200-meter backstroke in Pan Pacific swimming championships in a personal-best time earlier this month in Brisbane, Australia, and led off the winning 4x100-meter medley relay.

This success came after graduating with honors from Princeton in June and securing a job with a Wall Street firm. The job, however, must wait until after the 1988 Olympics.

Veatch, 22, and Kelley Davies, 18, of Ashton head a wave of talented swimmers looking to challenge the established stars in next year's Olympic trials. Davies, a freshman at three-time NCAA champion Texas, won the Pan Pacific 200 butterfly.

"I'm not sure we could have done a thing better then we did this summer. It worked out exactly as we planned for the long run," said Ray Essick, executive director of U.S. Swimming. "We got some very pleasant surprises with some of the new talent."

But Essick was quick to caution that, despite overwhelming success in the Pan Pacifics and the Pan American Games in Indianapolis, "we certainly can't rest on our laurels because the rest of the world will be using us as their standard. I'm sure that's what happened in Strasbourg {during the European championships}; they probably put our times up and took aim."

In most cases, the winning times in Strasbourg, France, earlier this month were better than the winning times in Brisbane and Indianapolis.

"There are some very strong swimmers in my event alone," said Veatch. "In the world right now, I'd place third, and that's incentive to work harder."

Veatch and the other U.S. swimmers got a taste of how hard the rest of the world's swimmers have been working in the 1986 world championships in Spain.

"Madrid was a rude awakening as to just how fast international swimming has become," Veatch said. "In {the} '84 {Olympics}, the U.S. dominated, obviously, without the Russians or East Germans, and the impression is that the U.S. has always been on top. But Europe is a force to reckon with."

In Spain, Veatch took fourth in the 200 backstroke and seventh in the 100 backstroke. But last year was Veatch's first healthy season since 1984, when he took national titles in each event. After mononucleosis effectively nullified 1985, Veatch regained lost ground late last summer. At the U.S. World Games trials last year, he won twice.

And in Brisbane, "Danny had one of the best meets of any of the men," said Richard Quick, U.S. national and Olympic coach who was the head coach at the Pan Pacifics.

In Brisbane, Veatch, who finished second in the 200 meter backstroke at the nationals to qualify for the Australian trip, trailed Canadian Mark Tewksbury through nearly all four lengths, but outtouched him for the victory, 2:01.38-2:01.56.

In addition to his rise and fall in the swimming hierarchy over the last four years, Veatch also has survived a rigorous Ivy League academic schedule. More importantly, he said, "my perspective on the sport has changed radically. I've become more focused. I'm concentrating on swimming for all the right reasons, and I'm not sure I was in it for that before.

"Discipline and motivation sounds good, especially in an interview, but it's something I really believe in," said Veatch. "Swimming's formed me as a person, it's certainly allowed me to distinguish myself, even when I was interviewing on Wall Street."

Davies is also opening a new chapter in her life this year. The top high school recruit in the nation in 1986, she signed with Texas for the opportunity to train with Quick.

A sprint freestyler and butterflier on a national level since she was 14, Davies concentrated on the butterfly and last summer burst onto the international scene. At the World Games trials, she finished third in the 200 butterfly and sixth in the 100. She won the 200 at the Goodwill Games in Moscow and toured Europe over the winter as part of the national team.

"There's been a significant turnover {in U.S. swimming} with people like Kelly," Veatch said. "When someone like Kelly comes along and wins it, that's terrific."

At Brisbane, Davies rebounded from a stomach ailment and a slow start to win the 200 meter butterfly in 2:12.51.

"Her last 15 meters was as good as I've ever seen from anyone, it looked like she wasn't going to win, but she got tough mentally and physically," said Quick.

The amount of progress made by swimmers like Veatch and Davies will affect the makeup of the Olympic team, said Quick. "The people who are sure of themselves psychologically and physically, like Mary T. {Meagher} and Betsy Mitchell {'84 Olympians who rested this summer and did not compete} will hold back in a pre-Olympic year. The people in the challenging positions will build their confidence up and make more ground the year before. So new challenges will be established and the result will be a very good Olympic team."

The challengers are ready. Said Veatch: " '88 is it. It's time to grow up."