It has already come down again but the Dow got very close to the 11,000 mark. The Nikkei is at a 5 year high. Gold hit $500 and ounce while platinum hit $1000/oz! Lots of big psychological barriers going on.
Is investing all math or is it also impacted by psychology?
Go Figure: Zeroing In on Market Milestones
The Round-Numbers Approach To Making Decisions Can Have A Real Impact on Trading
December 5, 2005
Wall Street traders and bankers love zeros this time of year -- at the end of their bonus checks. When it comes to big, round numbers, investors are more ambivalent.
Take 11000. The Dow Jones Industrial Average has been peering at that lofty milestone for more than four years and has been within striking distance of it for days, but investors can't seem to push it over the top. The same had been true of gold until it broke the $500-an-ounce mark last week for the first time since 1987 and Japan's Nikkei 225 Stock Average until it settled above 15000 points Thursday for the first time in nearly five years.
Many analysts dismiss the focus on such milestones as numerology that doesn't carry much weight in stock picking or gauging the economy's health. But the approach of round numbers has real impact on trading because many investors base real decisions on them. If the industrial average hits 11000, some figure, many will sell to solidify profits, so maybe it is better to sell now -- a mind-set that knocks down prices. Others figure momentum is building and rush to buy, boosting prices.
"It's 100% psychological," says Michael Cook, head of Cook Mayer Taylor, an asset-management firm in Memphis, Tenn. "These are emotional figures, but they're real because" individual investors pay attention to them, and "the market is made up of a host of individuals."
Precious Metal Tops $500 Mark, And DJIA Adds 106.70 Points To Close In on Key 11000 Level
December 2, 2005
In a day of active trading across the financial markets, gold surpassed $500 an ounce, the Nasdaq Composite Index jumped to a 4½-year high and the Dow Jones Industrial Average surged 106.70 points.
The stock rally began with Tokyo's Nikkei index surpassing 15000 for the first time in five years. U.S. stock futures rallied before regular hours as the European Central Bank raised its benchmark interest rate to 2¼%. Higher rates could create headwinds for European companies. With the Federal Reserve expected to stop raising U.S. rates next year, analysts recommended a shift toward U.S. stocks.
Nikkei, Gold Hit Milestones; Dow Nears One
Japan's Strengthening Economy And Market Overhauls Propel Stock Index to Close Above 15000
December 2, 2005
The growing strength in Japan's economy sent the Nikkei Stock Average to a five-year high, zooming past the 15000 mark. Sustaining those gains will depend in part on whether Japan can keep moving toward U.S.-style practices for how companies and markets are run.
The Nikkei hadn't closed above 15000 since December 2000. Yesterday, the 225-stock Nikkei rose 258.35 points, or 1.7%, to 15130.50, leaving it up 32% for the year.
