Tuesday, February 28, 2012

Dow 13,000

Whenever an index is bound
For a number exceedingly round,
The luster of Midas
Convinces insiders
It's time that their longs were unwound.

Ah, the enthralling power of round numbers; by itself, the Dow Jones Industrial Index hitting 13,000 for the first time since 2008 means nothing. It is neither fundamental - i.e., indicative of the economic prospects of companies, markets and industries - nor truly technical - i.e., indicative of the patterns of buying and selling behavior in stocks. But it does provide a convenient marker of how far the US stock market has come since its bottom (roughly double), as well as how far it has to go to reach the previous high of 14,164.53, set on Oct. 9, 2007. Still, most of those who make their living in the markets seemed to betray a certain exasperation with the whole hoopla, such as the market strategist who said: "No doubt (the market) has been overbought since the beginning of February, but in a powerful uptrend, price will continue higher for some time amid overbought conditions." Bloomberg's Margaret Brennan may have tweeted it best: "Dow closes above 13,000 for the 1st time since 2008. Can we stop talking about it now?" Now that the limerick is out, sure.

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