Dow 11,000: BFD

Well, the Dow finally crossed 11,000. Big deal.

The amount of ink being spilled on this non-event is incredible. Looking at the Fox News website this evening, it is the top news story. As if there's nothing going on in the entire world that could be more significant. Astounding....


I realize I should be having a big helping of humble pie a la mode right now based on the market's rise, but as I look through my charts, I am more convinced than ever that this little fresh-new-year rally is just an short-term blip.

And just to show I'm not making this up as I go along, step back with me to the blog I posted a month ago where I made an assertion that the "breakout" would be a wimpy one. My exact words were, The breakout (if we agree to call it such) just took place on December 1st. If past patterns are any guide, if the breakout holds, the rise we may see is a relatively wimpy 2.44%.

The breakout I described is still very much in place. The closing price on "breakout day" was 690.21 for the Russell 2000 (the index in question). A 2.44% gain would push that to 707.05. Today was the highest level the Russell 2000 has reached so far. What did it close at today? 706.24. So it seems we're pretty close to the top of this rally, based on my estimates from over a month ago.

Let's take a look at the index chart itself (reminder - click the graph to see a bigger version):