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Dow 20,000 and how we'll get there

Dow 20,000? It may seem like a stretch, especially with U.S. stocks comfortably perched at record levels. But investors including Paul Schatz, President, of Heritage Capital, are confident the market will hit that level in 2015. “Dow 20,000 is going to become doable once we close above 18,000 for a week.” Based on current levels, that would be about an 11.5% move higher for the Dow Jones Industrials (^DJI).

Schatz, a long-time bull, is getting even more bullish as the dollar (UUP) continues to strengthen against the euro and the yen. “People are going to seek where capital is treated best our dollar has been it.” says Schatz who expects the greenback to continue climbing, driving further gains for large cap U.S. stocks. (^GSPC)

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Among his preferred sectors, semiconductors (SOXX) and transportation (^DJT) companies. Although each has advanced more than 20% apiece this year, Schatz thinks these sectors will continue to be winners. “Semiconductors are still leading, this is the most positive time of the year for the semis through January and I think you stick with the transports.” As for stocks, he likes Alibaba (BABA) because it is the dominate online retailer in China. 

With just a few weeks left in 2014, U.S. stocks should also get a seasonal boost. “If you are a manager underperforming you are going to throw cash in” says Schatz who notes the clock is ticking for many fund managers  “It’s a performance chase for all the people lagging the indices, all that money in hedge funds and mutual funds sitting in cash.”

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