The major headline hitting the press this weekend speaks for itself. From its low of 6470 on March 6th, the Dow has gained about 23.4%, making it the blue-chip indicator's best four-week run since May 1933, when it gained 31%. The Dow's "Bullish Wedge" pattern was first discussed here in the Marketdoc Report on February 23.
Inside of five weeks the Dow has gained over two-years worth of average return-- and most investors missed it!
Are "Happy Days Here Again" as the popular song from Franklin D. Roosevelt's 1932 Presidential campaign suggests? I expect this pattern to continue to about a 40% retracement. This puts the Dow somewhere at the 9000 level. Could we go lower? Yes, but I don't think we will. We may see some consolidation along the way. Aside from an unexpected terrorist attack or something similarly catastrophic, there are too many forces building for an upside case. Between the positive economic numbers we are starting to see (before Washington's stimulus has even begun to work) and the excellent appearance on the world stage this week by President Obama which gave world leaders some reassurance (we can debate over substance but this fact remains) and, lastly, there are alot of money managers out there who missed this HUGE move upwards and they want to get in on the action. Imagine being a money manager of hundreds of millions and you MISSED the biggest gain in the market since 1933!
What an impressive week!
Note: The above is for information purposes only. For specific decisions to buy, sell, or hold investments for a specific person or portfolio you must consult your personal financial advisor.
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