The media is paying a lot more attention to the 15,000 barrier than it did when the Dow broke the 14,000 level, and I doubt it pays as much attention when the Dow breaks the 16,000 level, which it will, sooner or later.
15,000 is a media-worthy number. 1,600 is not. I guess people have a need for the phony significance or specificity of numbers. There is a school of investment theory for these people. It is called the ‘chartist” or technical approach of investment theory. They believe that past movements in stock prices, plotted on a chart or graph, will predict future price movements, based on a complex, ever-changing set of patterns with such exotic names as “inverted head and shoulders”. To me, people who believe in astrology are most likely to embrace this chartist approach or this love of meaningless numbers. I use chartistism merely as a reference point in some buy/sell decisions. For example, one chartist is predicting gold will drop to $1,322/oz. If I see that happen, I will likely buy some more gold.
To their credit, many chartists are now predicting an 8-10% market correction, meaning the Dow might drop to 13,500 or so before resuming its upward climb. I suspect they are right, not because of some obscure pattern of price movements but simply because the recent market rally has been so steep. Periodic corrections are good-thing, not a bad-thing.
When good news is good and bad news is also good, the bull is out-of-control. We’ve seen that several times in the past two weeks, when the market simply ignored bad news and rallied anyway. While nobody knows if there is a 10% correction in front of us or not, I do believe that it will happen in the short-run but continue rising in the long-run . . . until that day when we have our “Jim Fixx” moment, and it will likely begin in Europe.
Stay tuned . . . I’m looking for more obscure, non-media-worthy numbers!