Dow aims high, with 18,000 back in sight

The Dow, which looked down and out in mid-February, is within striking distance of 18,000, a big round number with both psychological and market implications.

The Dow Jones industrial average rose for a third consecutive day Thursday, closing up 18.15 points to 17,926.43. The last time the Dow closed above 18,000 was July 20, 2015.

At the Feb. 11 market low, the Dow closed down more than 10% for the year and was more than 14% off its May 19, 2015, all-time closing high of 18,312.39. If the Dow, now roughly 76 points shy of 18,000, can take out that old milestone, it would send a positive message to a market that has traded sideways for almost a year.

One Wall Street analyst that identifies market trends using stock charts and past price action says a move above 18,000 will be more than just a boost to investors’ bruised psyche after the worst start to a year ever. Dow 18,000 will show it has taken another step to break the downtrend it has been stuck in.

“Big round numbers are more than psychological,” says Mark Arbeter, president of Arbeter Investments.

The fact the Dow has topped 18,000 in the past, and fell just shy of that level in November 2015, means a break above 18,000 “ends the series of lower highs that began in May 2015,” he says.

Arbeter says a market breakout would be signaled by a 1%-plus rise above 18,000. Still, with stocks overbought after rising 2% this week, a stronger breakout would likely occur if it happened after a pullback, he added.