The Dow Breaks 10,000
Oct 15, 2009
Posted by Jody Eisenman | Filed under Uncategorized
In a move that many viewed as inevitable, The Dow Jones broke 10,000 yesterday on the upside. The last time we were at these lofty levels was in October of last year, when we went falling through it to eventually bottom at 6440. As I have discussed previously, the run up off those lows has been nothing short of spectacular. Even more impressive is the NASDAQ, which has risen to 2172 off a low of 1265 in March, a gain of over 70%. Truly amazing.
The gain was been so dramatic that the breadth has caught virtually everyone by surprise. Since March, the pullbacks in this rally have been short and sweet. I do expect a pullback somewhere, and this psychological level is as good a spot as any. However, the way money has been flying into equities makes it seem as if the declines last year are a forgotten memory. There are still many supposed “experts” who have not participated in this rally, and a few more unfortunates who have been short and suffered severe losses. With almost 3.5 trillion dollars still sitting in money market funds currently, there is still plenty of potential buying power out there. On the other hand, Citi and Goldman Sachs reported somewhat disappointing quarterly results, so both are down a few percentage points this morning. I continue to believe that as long as the credit markets remain strong (roughly eighteen times more money has moved into bonds this year compared to stocks) the stock market could stay strong. How high we go before a meaningful pullback is anyone’s guess.
