Dow Jones Industrial Average: Why 30,000 is a Real Possibility

The bull market is now well over 3,400 days old.

And there are no clear signs it’ll end – at least, not anytime soon.

Since January 2016, the Dow Jones Industrials rallied from 15,450 to 26,200.

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The NASDAQ soared from 4,350 to an all-time high of 8,100. The S&P 500 jumped from 1,850 to 2,900. The Russell 2000 rocketed from 943 to 1,740.

In fact, we wouldn’t be shocked to see the Dow hit 30,000 this year.

Given the momentum, tax cuts, strong consumer spending, low unemployment, and 4.1% U.S. GDP it’s a possibility.

 The Federal Reserve Deserves Some Credit

At a Jackson Hole, Wyoming presentation, Fed Chair Jerome Powell pointed out how strong the economy is. He added that he doesn’t see much risk of economic “overheating,” as far as inflation is concerned, and he continues to support the Fed’s gradual rate hike policy.

“The economy is strong,” Powell said“Inflation is near our 2 percent objective, and most people, who want a job, are finding one. My colleagues and I are carefully monitoring incoming data, and we are setting policy to do what monetary policy can do to support continued growth, a strong labor market, and inflation near 2 percent.”

The chairman's dovish tone about the economy and his message that the Fed plans to stick with a gradual pace of rate hikes helped spark last week’s rally.

 "With solid household and business confidence, healthy levels of job creation, rising incomes, and fiscal stimulus arriving, there is good reason to expect that this strong performance will continue," he said.

Clearly, the market likes what it heard. At this pace, given economic strength and overwhelming bullishness, Dow 30,000 may not be long off. 

Granted, the Dow is overdue for a healthy pullback with over-extensions on relative strength (RSI), MACD and Williams’ %R (W%R), but as long as it can stay above its 200-day moving average, the uptrend will remain intact.

Given this data, 30,000 on the Dow is a real possibility this year.

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