Well, it happened. The Dow Jones finally closed above 11,000 a level it has not seen since the Fall of 2008. There weren’t much in the way fireworks to go along with the occasion and that could be because the rise was rather wimpy. The market closed with the Dow just 5.97 points above 11,000, a gain of a mere 8.62 points or 0.08%, hardly the kind of jump you would hope for on news that Greece was going to be rescued. Also, the Dow’s good news was not endorsed by its bigger cousin, the S&P 500, which is dancing with its own technical challenge, breaking through 1200; it closed Monday just a wee bit shy of that at 1196.48.
The S&P 500 has further upside potential according to Merrill Lynch chief technical analyst Mary Ann Bartels, but first it’s got to contend with resistance levels at 1200 and then again at 1220-1230. If the broad index can surmount those psychological obstacles Bartels thinks it’s got a good shot at 1325, or about 10% higher. If that happened the Dow would likely make it’s way past 12,000. Of course, this is all technical talk. The stock market must also deal with fundamentals and there the talk isn’t quite as upbeat. I spoke late last week with David Rosenberg, chief strategist at Gluskin Sheff, and he made some pointedly pessimistic comments about the nature and durability of this current market rally.
On balance, I’m tickled by the technicals but feel funky about the fundamentals.