Dow Domination: 23,000 and Counting!
The best part about my new “Dow 23,000” hat is that I can use a Sharpie to easily turn it into a “Dow 28,000” hat in just a few months as this unstoppable bull market continues its charge…
Yes, the Dow Jones Industrial Average registered another mundane milestone on Tuesday as it finally crossed 23,000 intraday (we’re still waiting on a close above the round number). After an excruciating wait of more than two months, we finally have another 1,000-point climb to celebrate!
Of course, these little 1,000-point parties are completely ridiculous. If you stay glued to the financial news, you might even feel the market mania starting to set in. Word’s getting out: the stock market is hot.
Back in early August when the Dow first eclipsed 22,000, I said I wouldn’t be surprised if the milestone marked the beginning of a late summer pullback in stocks. My reasoning was simple: whenever investors start to get cocky, the market finds a way to knock ‘em down a peg or two.
But a legitimate pullback never materialized. August can be a trying month for traders. Same goes for September. But not this year. After a short sideways pause, the major averages stormed back to new all-time highs in September. They haven’t looked back since.
We had our fun when the Dow crossed 20,000 back in February. After all, it took several stalled-out attempts to crack the magical 20,000 mark. We had to wait two agonizing months for the real breakout to happen. Ridiculous!
Thankfully, the 1,000-point wins are beginning to cluster.
The market gods gave us the break above 23,000 a mere 53 trading days after 22,000 was first breached. It’s the fourth round-number milestone the Dow has hit in 2017. And it might not be the last. Dow 24,000 is just a little more than 4% away from yesterday’s close.
“However, each clamber higher for the Dow will make its 1,000-point achievements far less momentous — at least arithmetically speaking,” MarketWatch reports. “That’s because, as the market rises, each 1,000-point advance becomes smaller in percentage terms. For example, the rally between 10,000 and 11,000 in 1999 marked, of course, a 10% rise, while the move from 19,000 to 20,000 was a 5.3% move, and the climb from 20,000 to 21,000 for the Dow marked a 5% rise.”
But let’s not allow some pesky mathematics to get in the way of our fun…
The market continues to march higher. Winning trends and consistent trading gains are yours for the taking. Way back in the summer, we noted that a 5% pullback would scare plenty of weak hands out of stocks and provide the perfect setup for a blazing fourth-quarter rally. Our reasoning was simple: Most investors have forgotten what a pullback even feels like. Even a mild correction could induce some serious short-term panic.
Turns out even a 5% drop wasn’t a necessary ingredient for the start of our predicted fourth-quarter melt-up. Instead of taking breaks, stocks are breaking records.
Naturally, the market’s rise and the rapid-fire milestones have some investors worried. Stocks are expensive. I get it. But I don’t seriously believe that these little 1,000-points celebrations will stop the bull market in its tracks.
But I would like to see the media back off the round-number madness that has consumed so many market watchers this year. The longer this bull market stays at least partway under the radar, the better off we’ll all be.