Dow Hit 15,000! Where Does it Go From Here?

By
A A A
Share |

Drop the confetti, cue the band, and light the fireworks because on Friday, the Dow Jones Industrial average reached 15,000 for the first time ever. For traders, 15,000 is a psychological level and psychological levels do hold significance.

In theory, when these levels are reached as part of a bull market, traders should get that warm and fuzzy feeling like we all did when Phil Mickelson finally won the Masters but what does it really mean for the market when all emotion is stripped out?

We went back and looked at the last three major levels and where the Dow was seven trading days after it crossed the level.

14,000- Up 2.35 percent 13,000- Down 1.25 percent 12,000- Up 1.99 percent

Also worth noting, these levels didn't serve as the strong support that traders believe they are. The 12,000 and 13,000 levels were tested and failed after initially breaking out.

Now that we've looked at the past, what do the charts say about the future? Once a stock or index reaches an all-time high, finding strong levels of resistance are nearly impossible but if we draw the upward trend line of the ascending channel of the Dow (see the chart below), we find approximately 300 points of upside.

Of course, that doesn't mean that it won't run into resistance along the way and it doesn't mean that the Dow will add another 300 points any time soon.

How about the downside? What are the levels of support? The 50 day moving average currently sits at 14,511-3 percent below current levels. Above that, there is a weaker support level at 14,537 and 14,715.

Technicians confirm moves by looking at volume. Despite some impressive moves, volume has formed a downtrend since April 25. This is a troubling sign that might indicating the strength of the rally is drying up. RSI currently sits at 64-approaching overbought conditions but trending up. Volume and RSI contract each other making it difficult to gauge where the market goes next.

What to do now

Although the market has fallen back below the 15,000 level intraday, reaching that level was significant. However, it's safe to say that looking at it from a purely technical perspective, it holds very little weight. For that reason, traders should look at the chart and play what the chart is saying. In this case, it's hard to fight the upward trend. No need to change your thesis until technical levels break.

Stock chart: 

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Profit with More New & Research . Gain access to a streaming platform with all the information you need to invest better today. Click here to start your 14 Day Trial of Benzinga Professional



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs , Investing Ideas

Referenced Stocks: DIA

Benzinga


More from Benzinga:

Related Videos

Stocks

Referenced

67%

Most Active by Volume

89,970,926
  • $16.15 ▲ 0.12%
77,131,582
  • $58.94 ▼ 1.31%
67,336,935
  • $26.56 ▲ 1.68%
48,814,124
  • $86.20 ▲ 0.02%
47,526,126
  • $23.21 ▲ 0.78%
44,660,424
  • $23.91 ▲ 6.36%
38,799,699
  • $4.289 ▲ 4.36%
36,199,890
  • $40.01 ▼ 0.97%
As of 4/17/2014, 04:07 PM