SKY'S THE LIMIT AS INDEX IGNITES : 10,000 HO!Byline: Deborah Adamson Daily News Staff Writer U.S. stocks will likely reach and breach the 10,000 barrier in the Dow Jones industrial average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. in the near future despite warning cries that the market is overvalued Overvalued A stock whose current price is not justified by the earnings outlook or price/earnings (P/E) ratio and thus, expected to drop in price. Overvaluation may result from an emotional buying spurt, which inflates the market price of the stock or from a deterioration in a , analysts said Thursday. The euphoria that reverberated around Wall Street Thursday as the large-cap Dow came within 65 points of 10,000 before falling back is the latest sign of the strongest bull market run in the nation's history. ``The market may continue to trend somewhat higher,'' said Harvey Hirschhorn, chief economist The Chief Economist is a single position job class having primary responsibility for the development, coordination, and production of economic and financial analysis. It is distinguished from the other economist positions by the broader scope of responsibility encompassing the and investment strategist at Stein Roe & Farnham mutual funds in Chicago. ``The direction right now seems to be on the upside.'' The Dow Jones industrial average rose 124.60, or 1.3 percent, Thursday to close at a record 9897.44. It rose above 9900 earlier in the trading day In Business, the trading day is the time span that a particular stock exchange is open. For example, the New York Stock Exchange is, as of 2006, open from 09:30AM to 4:00PM. Trading days never take place on weekends. , but gave up its gains as some profit-taking ensued. The Standard & Poor's 500, a broader market indicator, rose 10.84 points, or 0.8 percent, to 1297.68, while the Nasdaq Composite The Nasdaq Composite is a stock market index of all of the common stocks and similar securities (e.g. ADRs, tracking stocks, limited partnership interests) listed on the NASDAQ stock market, meaning that it has over 3,000 components. It is highly followed in the U.S. went up 6.25 points, or 0.3 percent, to close at 2412.25. The market was fueled by a rebound in oil stocks, reduced concerns about interest rate hikes, a strong U.S. economy, consumer optimism, healthy retail sales gains and new policies that will help patch overseas economies, analysts said. Absent a damaging external event or a catalyst that will lead to higher inflation, slower growth or higher interest rates, the market should continue moving up, analysts said. ``The 10,000 barrier is a psychological barrier. When we break through that, the market might run,'' said Jan Holman, vice president of investment services at American Express American Express (NYSE: AXP), sometimes known as "AmEx" or "Amex", is a diversified global financial services company, headquartered in New York City. The company is best known for its credit card, charge card and traveler's cheque businesses. Financial Advisors in Minneapolis. ``This is the type of boost long-term investors should enjoy. They should approach it with glee.'' Jef Schwartz, an online investor in Glendale, believes the Dow could hit 10,000 early next week. ``It's momentum,'' said Schwartz, who admitting to selling a few of his holdings - eBay and Xoom - on Thursday. Indeed, most market indicators point to the bullish trend continuing for a while, with a few breathers. Investors Intelligence reported this week that its Bearish Sentiment Index sentiment index A numerical guide to investor feeling toward the securities markets that is constructed to determine whether certain segments of the investment community are bullish or bearish. still reflects a bull market. The percentage of bullish investors stands at 50 percent while bears top 32 percent. The remainder are long-term bulls who are looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. opportunities to buy at market dips. The New York-based newsletter said that in a bull market, its index is usually 45 percent bulls and 35 percent bears - close to the reading this week. Two months before the October 1987 correction, it registered 61 percent bulls and 19 percent bears. The rationale behind the index is investors tend to jump on the bandwagon a little too late; it becomes overly optimistic just before a bull run is petering out and it hits a pessimistic low when the market is about to turn. So a 61 percent bull reading in 1987 rightly signaled an imminent downturn. While the index now is nowhere near 1987 levels, other signs point to trouble. Five weeks ago, the index reached its highest level of bullishness in 12 years - a sign that a major downturn could be coming - before dropping back. Compare that to the end of 1994, when the Dow was around 3,700. The index showed the largest percentage of bears in 12.5 years. Sure enough, the market took off the following year and hasn't yet abated. Leading indicators also show that a pullback may be coming. Late last year, the Dow Jones bond average, Dow Jones utility average The Dow Jones Utility Average (also known as the "Dow Jones Utilities") is a stock index that keeps track of the performance of 15 prominent utility companies. Components and Dow Jones transportation average The Dow Jones Transportation Average (also called the "Dow Jones Transports;" DJTA) is the oldest U.S. stock market index. Components Today, the index consists of the following 20 companies (weighted to adjust for stock splits and other factors): ``The market is vulnerable,'' said newsletter editor Michael Burke. Yet another sign of trouble is the reading from the model used by Fed Chairman Alan Greenspan Alan Greenspan Dr. Greenspan is Chairman of the Board of Governors of the Federal Reserve System. Dr. Greenspan also serves as Chairman of the Federal Open Market Committee (FOMC), the Fed's principal monetary policymaking body. to gauge the market. According to the model, the market is overvalued by 30 percent, said Don Wellenreiter, a commodity trading adviser at Defined Risk Asset Management in Westlake Village. Right before the October 1987 crash, it read 33.7 percent. ``It's not an investing market. You have to be very careful,'' he said. CAPTION(S): Photo PHOTO (Color) The arms of a trader frame a price board Thursday at the Chicago Board of Trade Chicago Board of Trade (CBOT) The second largest futures exchange in the US, and a pioneer in the development of financial futures and options. . Beth Keiser/Associated Press |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion