Dow closes in on the 20,000 milestone

As the Dow closes in on the 20,000 milestone, Mark DeCambre at MarketWatch (www.marketwatch.com) penned an article that asks the question, is reaching 20,000 really that significant?  After all, the Dow Jones Industrial Average represents only 30 stocks out of the thousands that make up the broader market.  Outsized moves in any of the 30 components can have a very big effect in the overall index.  As an example, the latest surge in Goldman Sachs has contributed about a third of the Dow’s recent 1,000 point move.  In addition, 1000-point moves aren’t as meaningful as they used to be.  When the Dow moved from 1,000 to 2,000 it was a 100% move, and the move from 4,000 to 5,000 was a 25% move.  But a 1,000 point move from 19,000 to 20,000 represents just a 5.3% advance.

Whether Dow 20,000 will be a ceiling or another milestone remains to be seen.  But in any event, this 1,000 point marker is less of a Herculean feat than ever before, as the following chart illustrates.

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