What a difference a year makes. Thanks to a furious rally in the past eight months that very few predicted, the Dow has climbed out of a seriously deep hole. In an another victory for the Bulls, the index seems poised to print the tape at 11,000 level — perhaps this week — confirming the economic contraction is exhausted and that we are in the recovery phase. While this is just an assumption ; it is one based on the premise that the stock market is often a leading indicator for the economy. Whether the Dow is an accurate measure to base this conclusion on, that’s up for debate. For the time being however, and while recognizing the fact we still are in a cycle of large economic risk-taking ; a cycle which keeps getting punctuated by consecutive failures and bailouts, the index is soaring past 10,400 level, up 145 points so far. Having said that, while 11K is significant on a psychological level, it is not especially meaningful on a technical one.
Chart: Yahoo! Finance