Dow Closes In On 13,000 February 2012: Is 15,000 Really Possible This Year?
Anything is possible.
The Dow Jones proved naysayers wrong once again by moving closer to 13,000 after a few days of up and down activity characterized by higher volatility. The Dow Jones rose to its highest level in 3 and a half years closing at 12,949 with the benchmark Standard and Poor’s 500 comfortably above the 1,350 resistance level at 1,361. The news on the economics data front has been more positive than mixed positive causing some analysts to increase their expected U.S. GDP levels for the year while some economists are still in the doldrums expecting a recession. We believe the chances of a recession in the U.S. economy are less than 1 in 10 and don’t foresee this happening unless an external shock occurs that is unpredicted such as the Japanese earthquake and Tsunami of 2011 that kept the economy from rebounding sooner. We do not believe uncertainty from fiscal or monetary issues would stop the upward momentum at the current time.
The rebound in the jobs market has been solidified with new economic data this week related to jobless claims and the economy benefitted from a stronger housing market. Greece played a big part in trading sentiment early in the week but the impact from headlines across the pond had less of an effect when unemployment data showed continued strength which increased calls for the jobless rate to get below pre Lehman-Bears crisis levels before the November 2012 elections. While economists calling for a recession have taken to the hills with little or no explanatory power, we predicted improved performance in equities which has occurred. We are strongly considering taking our economic forecasts from mixed-positive to positive.
Barron’s may have moved early this week with predictions of Dow 15,000 but there is some reason to believe that with heightened uncertainty and bad calls from economists who are no longer sharp at gauging trends based on electronics or the internet, the wall of worry could lower with equities moving up. Siegel could be on to something.