The Dow officially closed above 17,000 for the first time ever last week. Big round numbers are viewed many different ways, with the most popular being there is a good amount of hoopla surrounding these big milestones. It is a chance for investors and the media alike to re-evaluate and talk about the current state of the market. Were you in this run? Did you miss it? Etc.
Getting right to it, it took the DJIA 153 days to go from 16k to 17k. As you can see below, this comes out to a +10.5% annualized return and was the 7th fastest ever.
Now that was closes, below is touches of these big round numbers.
Something that stood out to me was the fact we closed and touched 17k on the same day. So I broke it down to see how often this happens. In most all cases, once it touches a 1k area, a close above is right around the corner. 3k was the one that had some major problems, as it took nearly nine months to eventually happen. The rest all happened rather quickly.
Now the big question on everyone’s mind is do these big round numbers matter? Looking at the previous 16 times we’ve seen a close above one of these levels, here are the returns after. Doesn’t look too bearish to me.
Here are the any time returns since 1970. Initial closes above a 1k area actually produce nearly twice the average return 3-months later versus the at-any-time 3-month return. Guess 1k areas aren’t much for the bears to get excited about, huh?
What are the returns after the first touch of a 1k interval? Here are those, looks to be a little bit weaker than the first official close.
Lastly, here are all the closes above a 1k interval and the returns after.
What’s it all mean? Looks to me like these big 1k levels really don’t mean much at all. They sure don’t look bearish and you could argue things are actually stronger after initial closes above these areas. Then again, just 16 instances is a very small sample size and is easily swayed. Stay the course, we’re in a bull market and things still look good. 17k is just another reminder of that.