In the face of great skepticism and a laundry list of reasons why it shouldn't be happening, the Dow Jones Industrial Average (^DJI) burst higher in early trading today, eclipsing the previous closing high of 14,164 set on October 9, 2007. As it stands, the DJIA is also trading above the record intraday high of 14,198.
While the Dow's move into all-time high territory was not entirely unexpected, it is nonetheless a momentous achievement. Of particular note is the fact that today's record comes just four days shy of what will be the index's 4th anniversary of its low, which was set almost 4,000 points ago on March 9, 2009.
As my co-host Jeff Macke and I discuss, the final leg of the blue chip benchmark's journey was a drive of almost unstoppable determination, that was able to overcome obstacle after obstacle that many feared would see it stumble before reaching the goal.
The unparalleled surge in the Industrials not only follows a similar high attained by the Dow Transports (^DJT), but confirms the "Dow Theory" -a widely followed bullish indicator dependent on both indexes setting new highs together.
Historically, these types of peaks have tended to be just that, a market top. For example, the previous record in October of 2007 was the culmination of a six-year, 75% rally that ultimately saw stocks cut in half over the ensuing 18 months. While that bear market, recession and financial crisis are still fresh in the minds of investors, what many traders have forgotten about is that the October '07 peak came a full eight months (and 20%) after the previous market peak (set in January 2000 dot-com era) had been toppled. The point is, these breakouts have the ability to run for a while and don't necessarily trigger an instant sell-0ff.
For now, the new record will usher in a moment of euphoria, a brief round of hand shakes, and a boatload of analysis as to which stocks and sectors will lead the way now and how much further this four-year old bull run can go.
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