Are the S&P and Dow Headed for All-Time Highs?

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Published by Debra TaylorCPA/PFS, CDFA, JD | April 25, 2016

Last week, the S&P 500 rose above the 2,100 level for the first time since December 2015.  And the Dow Jones pushed above the 18,000 level, which has been the “talk of the town” on Wall Street.  Opinions about the significance of rising above these levels are divided.  Some believe there is great meaning tied to these levels because it may encourage investors to buy stocks or become slightly more bullish if this level is exceeded.  While others feel that the Dow’s 18,000 level has no significance at all.  No matter what, the levels are certainly nearing all-time highs.

If we look specifically at the S&P 2,100 level, we know that the market has met resistance here several times before.  In fact, the S&P 500 has closed above the 2,100 level 95 times since December 2015.  Moreover, on 56 of those 95 days, it also traded beneath 2,100 before closing above it.  Basically, it seems there is no escaping that level, at least up until now.

Looking at the Dow, the numbers show that, since December 2014, the Dow has gained less than 30 points.  That, however, does not mean it was calm during that time.  The Dow has actually moved a total of 42,204 points (combined) since its first close above 18,000 in 2014 (source: LPL Financial Research, April 2016).

What does this mean for investors?  We are certainly at an inflection point.  The market needs a catalyst to break through its current levels, and the question is whether this current earnings season will provide enough positive news.  Although revenue is estimated to decline year over year, the market seems to be shrugging off this news so far.  Right now, we are cautious.  Stay tuned…

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