Magazine article Modern Trader

How High Can Dow Go?

Magazine article Modern Trader

How High Can Dow Go?

Article excerpt

It's a good run, but it can last forever. "My gut feeling is that it can't be sustained," says Mike Cavanaugh, equity analyst for My Trading Online, of the recent surge in the Dow Jones futures. Cavanaugh, though, doesn't trade on his gut and says that fundamentals keep on coming in strong. "The [employment] number is what people will focus on and as long as it looks strong, [the advancement] will continue," Cavanaugh says.

The employment picture has shown slow, steady progress in recent months --January's numbers indicate the unemployment rate has dipped to 5.7% but with anemic job growth. Still, the economy is down by approximately 3 million jobs over the last three years. Cavanaugh says that investors will remain bullish as long as the employment picture improves month to month.

Ira Epstein analyst J.B. Siewers attributes the Dow's strength to a weak dollar helping exports and an improved economy. While a 1,000-point rally in just over a month calls for a correction, Siewers cautions that "you can't jump in front of a freight train. …

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