Tuesday, March 5, 2013

The Dow Breaks 14,200

The Dow Jones (^DJI) made a new all time high today reaching 14,286.37 during the intraday and closing at 14,253.77.  The last record was set during October 2007 then the great recession hit and down came the Dow violently losing 50% in the following 15 months.  Although the Dow set a new all time high today it would need to break 15,000 to beat the 2007 record taking inflation into consideration.  Will the Dow go to 15,000 in the near term?  The index is not likely to go uninterrupted to 15,000 it is more likely to get some corrective measures. 

Let's see if the index can evade the "sell in May and go away" adage.  Investors that were lucky enough to get in during the end of last year should be considering taking some profits if not most of them.  While dividend stocks still seem favorable buying them now is not a good idea.  Inflation has been dropping since last year and was reported at 1.6% for the month of January.  While deflation may not be in the radar inflation has stayed fairly low during the past year making cash not that bad of an idea for the short term.  Although the Dow set an all time high the Volatility Index (^VIX) has not made a new all time low.  The VIX failed to make an all time low in October 2007 and then the S&P 500 (^GSPC) and Dow both came tumbling down.  Will the same be true this time around? 

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