Dow 13,000? Get Ready for the Pullback
NEW YORK (TheStreet) -- Analysts aren't sure when the Dow Jones Industrial Average will close above 13,000. They're far more certain of the pullback to follow shortly thereafter.
Market participants are likely take some profits when the index reaches this psychological level. The last time the index closed above 13,000 was in May of 2008. Analysts have been speculating since January that equities are due to cool off after a steep run up this year. The 13,000 level might provide a key opportunity for investors to take money off the table.
As of about 11:25 p.m. ET, the index peaked above 13,000. But, it was wasn't barreling toward the level in anyway. Already, corporate news is keeping a cap on the index's gains. In particular, a 4% loss in Wal-Mart(WMT) shares after the retailer missed earnings expectations this morning was keeping the Dow from inching higher.
The buzz around corporate earnings is likely only to grow more negative, which will undoubtedly put dampers on overall market sentiment. According to S&P Capital IQ, the S&P 500's double digit growth streak of eight quarters is now in jeopardy. "The last time this happened was in
Meanwhile, first quarter earnings aren't looking good either. About one-fifth of companies decided to provide guidance this earnings season, versus the usual one-third of companies giving forecasts, according to S&P Capital IQ. Companies are reluctant to call their futures given uncertain growth rates in emerging markets and unpredictable raw material costs.
Paul Nolte notes that stocks overall have gained more than 15% since early October 2011. "There is room on the upside, and maybe another month or two to go," he writes in a recent research note. "But instead of looking to squeeze additional gains, it may make more sense to be looking for a door."