The Significance of Dow 10,000

By Ted Dieck | Recruiter’s View - Economy - Financial Markets | Oct 21, 2009

This is just a quick note to tell you the Dow crossed 10,000.

I suppose you’ll tell me, “Yeah, yeah, you said that last week.”

Well, I did; but that’s not the point.  The Dow crossed above 10,000 again this week.

It closed below 10,000 last Friday,    and on Monday, it closed back over 10,000.

I have no idea why Dow 10,000 is a big deal.  No idea at all.  Over the years, the Dow has crossed north of 10,000 roughly two dozen times.

But if enough people think it’s a big deal, then that’s enough to make it a big deal.

To me, the significance is this:  If Dow 10,000 is a popular idea, then for that reason alone, we want to see support at 10,000.  The Bears tried to knock stocks back on Friday, but the ceiling has become our floor.  Support came in, as the Late-To-The-Party fund managers continued buying equities, hoping to look like they’ve always been on the right side of the trade.

The 10,000 number is artificial, and everyone knows it.  Very possibly, we are trading up for artificial reasons, as well:  Fund managers need to look good by the end of the year.

RECRUITER’S VIEW:  It’s easier to imagine hiring coming in above Dow 10k.  You don’t have to believe in the trade to understand the economic benefits.  Washington has a lot of work to do before jobs come rushing back.  In that world, some of the conversations will get more aggressive.  Until our policy makers get real, little things like Dow 10k might help us fake it ’til we make it.  Crossing 10,000 twice adds confidence to our view that employers can recover.