Another New High for the Dow

The Dow Jones Industrial Average added 44.10 on Friday to reach another all-time closing high today of 15,556.08. The market moved forward on average volume, and all other indices closed in positive territory. What's becoming fairly evident in the percentage gains is that the Dow is beginning to lag the other indices (especially the Nasdaq), as today's top was almost exactly a 33% rise from the previous peak of 11,722.98 on January 14, 2000, 7 short years ago. Fibonacci, anyone?

Of course, some of us remember well what happened just months after that 2000 peak, but the scenarios are widely different. The 2000 peak and subsequent major correction came after an extended period of wild speculative activity with a great deal of new money coming into the market and a gain of well over 100% during the previous five years.

Nevertheless, coming off the March 11, 2003 bottom of 7524.06, today's overall gain checks in at a very healthy 107% in just less than four years.

The market should be close to a top, but there's so much money with a vested interest in this bull run that a correction in the near term seems less likely every day - and that's exactly why it's coming and coming soon.

Just like the sell-off of 2000, it's probably going to appear unannounced, but I'd lay money that it will be tied to a geopolitical event that will occur - or has already been set in motion - over time. The coming correction will not be as severe as others, but careful attention to this quarter's earnings numbers and corporate outlooks for the year may give more of an indication.

I'm only half certain that a correction will occur in the next 3-6 months, considering the momentum of this aging bull. I am convinced that keeping a lid on losses will separate the winners from losers in 2007, however.