Everything's up for debate in the new normal. One day we're up, one day we're down. One day I'm asking about a 6,000 Dow...today, I'm pondering it at 15,000. It seems the world has become inherently volatile, but then you talk to a trader and he tells you that there is no volume. One day it's $40 to fill up your gas tank, one day it's $65. Everybody is feeling the shocks and jolts of the changes around us but nobody can say why for sure.
As the closing bell rung last night, the DJIA had concluded it's best start to a year, since 1999.Again, this information is a tale of two cities, two decidedly different sides of the exact same coin. Having risen 6.4 percent in the first three months of the year, the index of 30 large companies gained 742 points during the rush.
Measured against other first quarters, that's the largest point gain since 1998 and the second best on record.
So can the Dow shoot to 15,000 or even higher? We know full well that both exuberance and fear reach irrational levels pretty quick once the markets begin moving. It seems that the bulls are on the attack and the ghosts of Jordan are blooming with the presence of Rose.
Bulls vs. Bears: Not Just a Chicago Thing
The last run up like this was in '99...you mean when the tech bubble popped? Yes, the Dow is up. QE2 doping is at its East German female swimming apex. Oil prices and global instability are pumping money into American equities. Emerging markets are looking more and more inflationary. This is all horseshit. The unemployment numbers are still lousy. Going from 8.9 to 8.8 is not an improvement. The economy still sucks. The dollar's in the toilet. We're going to see the Dow split in half like Jay Cutler in the crunch...
Daaa Bulls, Daa Bulls, Da Bulls
The economy has been handled well. We have averted the greatest crisis since The Depression. Consumer confidence is coming back. QE 1 and 2 got us through the tough times and are now being withdrawn. The economy is on fundamentally sound footing. The Dow reflects the underlying strength of our industrials sector, minus the pessimism. Europe is in deep trouble. The BRICs are facing the maturity issues of growing economies. The world is reminded why it needs America...
So who is right? Which camp do you fall into? Most importantly, how is your money, hedging your mouth? I am certainly hesitant to recommend anyone buy into the rally at this point. That having been said, I can admit having been wrong in similar situations many times before. I called the tech bust, for example, the problem being I was two years early and left a pile of cash on the table.
We have all learned to be more calculated gamblers over the past few years, but the question still remains: Do you know when to hold'em...and when to fold'em? What's the right play? Where's the Dow headed?