13,000: A Contrarian Viewpoint

Posted by Bess Levin, Apr 26, 2007, 10:28am

The Dow closed at over 13,000 yesterday and it’s all everyone can do not to send themselves into anaphylactic shock (except for John Thain—he actually did go into anaphylactic shock. You’ve got to read those labels, people, even non-peanut products “may contain trace nuts”). Our DB Senior Dow Correspondent’s response? “I can't wait for the reaction when we go from 19,000 to 20,000, which at that point will be a mere 5% move -- does anyone realize it is NOT A BIG DEAL anymore?? 1,000 point moves SHOULD happen up here! You’re killing me, Smalls!”

In other news, the graphics guy at the Wall Street Journal is just coming down from a serious acid trip:

krazykats.jpg

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Posted in: Carney: I'll have what he's having., DB special correspondent, Dow

Comments

Posted by , Apr 26, 2007 10:33AM

that picture is freaking nuts

Posted by , Apr 26, 2007 10:33AM

nice sandlot reference

Posted by , Apr 26, 2007 10:34AM

Yes! 13,000 means nothing. What I've been saying all along (ps that picture scares the sh*t out of me)

Posted by Anon, Apr 26, 2007 10:50AM

We know having the view that 13,000 means nothing means that you're super smart. Pat yourself on the back.

When you're finished consider that maybe the significance of 13,000 is psychological, and that it actually does have an impact, whether in terms of establishing market confidence or a signal that equity valuations are a bit too inflated at the moment.

Perhaps it's a phenomenon that's self-perpetuated by the press, but then again, perhaps it's perpetuated by the press because we're big dumb animals and seeing the pretty numbers go "000" is actually a pretty big deal, for whatever basic reason.

More trivial things have pushed the market in different ways in the past, and I don't think psychological benchmarks like the Dow hitting round numbers is necessarily trivial.

Posted by deeznuts, Apr 26, 2007 11:12AM

peanut allergies are not a laughing matter.

Posted by LD, Apr 26, 2007 11:30AM

KRAZY EYES KITTY

Posted by C, Apr 26, 2007 12:07PM

Anon 10:50: glad to see your Psych degree is coming into play here, but I think the "Contrarian" view is just that: a counter-point to all the champagne corks and confetti the press are throwing for this beautiful, succulent, round number.

No one doubts the importance of group-think or market confidence -- that much is obvious when every paper runs their bubbly headlines; what is less obvious is the real underlying relevance that most serious market watchers and / or technicians attribute it -- which is about a 2 on a scale of 1 to 10.

To be frank, few real traders "speak Dow" .. the SPX (S&P500) is the market.

Posted by PBateman, Apr 26, 2007 12:29PM

C- I couldn't agree more. The DOW is entirely worthless as an index; it's stock price weighted, so If I split my stock, I decrease my weighting in the index. But, hey, why stop drinking the champagne? Let's keep this rally going.

Posted by oc hedgie, Apr 26, 2007 1:42PM

Yes, SPX is where it's at. Only pikers and media types focus on the Dow.

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