PrimeRates Market Talk: Dow 16,000 –What Now?

Written by: Jack Boylan

Those nice round numbers just sound better, don’t they? And for all of talk of this being a “follow The Fed” rally, there is another factor that must be considered. If any market has climbed the  proverbial “wall of worry” it is this one. There are plenty of bubble concerns out there ranging from The Fed’s treasuries to student loans, real estate (again), gold and even Bitcoin. But the markets keep marching on. So, what now? Not to worry, Dow 20,000 is just around the corner:

Dow 20,000 has a nice ring to it. In fact, Dow 20,000 is not only doable, but also reasonable (yes, we can do 20% in six months). It may also boost the bullish juices if someone wrote a book, Dow 20,000 (note to publishers: the title is available).

Nice. Of course, that is just the kind of talk that happens during bubbles…wow this is confusing. Anyway, it’s been a good week for the market and early indications from the futures market shows that continuing this morning at least. And as odd as it may seem given the roiling political world these past few months the markets seem somewhat calm:

Solid U.S. data has eased concern that weaker growth in China and the euro zone may set back the fragile global economic recovery. The data helped to bolster the optimistic tone, especially on world equity markets.

I don’t know if “solid” is the right word, but I guess compared to other parts of the world, maybe one could go there. Today won’t be a data heavy day and with Thanksgiving coming up next week, volume might begin to slow. A day or two of profit taking before the holiday wouldn’t be shocking, but it may very well be a boring week or two for the markets. Tax-loss selling season is here too of course, so some of your losers may struggle to get off the mat for the next month or so. And don’t forget, if you are really committed to a particular stock (not a usual recommendation –don’t get married to your stocks!) you can buy it back after 30 days and still get credit for the loss in your taxes. January does tend to see a bump from some of the big losers as that selling pressure eases. Of course the flip side to that is that the losers tend to get hit during December, so the tax advantage might be bigger if you wait a few weeks. That is if you want more losses — (another strategy not generally recommended!). Enjoy your weekend everybody!


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PrimeRates Market Talk: Dow 16,000 –What Now?

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