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After several days of trying, the Dow Jones Industrial Average finally closed above 13,000 on Tuesday. Dow 13,000 is likely to have differing meanings for different investors. For me, it has made me hopeful; I am hopeful that CNBC and Bloomberg will finally be done talking about this number, which, in the grand scheme of things, is completely unimportant.

In this article, I would like to provide a bit of perspective on the Dow's recent feat. However, before doing so, I would like to offer congratulations to those investors holding the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA). For you, Dow 13,000 means you made more money.

I would also like to offer congratulations to shareholders of Comcast (NASDAQ:CMCSA). Comcast owns a majority interest in NBC Universal, the parent company of CNBC. I would imagine that given the retail investor's recent interest in the markets (data to follow), CNBC was able to generate at least a few extra viewers this week as retail investors recently putting money into the markets anxiously awaited new highs in the S&P 500 (NYSEARCA:SPY) and the 13,000 milestone for the Dow 30.

With that said, although the Dow 30 and S&P 500 are reaching new bull market highs, I would like to point out a few pieces of information that might be of interest to investors who are deciding whether to put new money to work at these prices:

First, the retail investor is back. Sort of. According to the Investment Company Institute (ICI), since the week ending January 11, fund flows into long-term equity mutual funds were a positive $5.082 billion (through ICI's February 22 update). February is shaping up to be the first month of inflows in long-term equity mutual funds since last April. Of course, the investing community often openly mocks the retail investor for being a contrarian indicator, so keep that in mind when gauging the meaning of the retail investor's resurgence (albeit still a small resurgence) in the context of rising equity prices.

Second, the Dow and S&P 500's new highs are not being confirmed by the transportation and semiconductor sectors, or by small cap stocks. The DJ Transportation Average, sometimes traded through the ETF, IYT, is not only trading well below its 2011 high, but also below its 2012 high reached on February 3. The Dow 30 traded as high as 12,869.95 on February 3. On that date, the DJ Transportation Average reached 5,424.83, and the IYT reached $96.13. Since that time, the Dow is up 1.05%, whereas the DJ Transportation Average and IYT are down 4.79% and 4.03% respectively. Dow Theorists beware.

The highly cyclical semiconductor sector is also not confirming the new highs in the Dow 30 or S&P 500. The Philadelphia Semiconductor Index is trading well below its 2011 high and also topped out earlier in February. Since the February 17 high of 438.63, the Philadelphia Semiconductor Index is down 1.74% while the Dow and S&P 500 are up slightly. For investors interested in a semiconductor ETF, the Market Vectors Semiconductor ETF, SMH, is one possibility.

Furthermore, small cap stocks, as measured through the Russell 2000 and the extremely popular ETF, IWM, are also diverging from the Dow and S&P 500. Both the Russell 2000 and IWM are trading well below their 2011 highs. In 2012, the Russell 2000 Index topped out on February 3 at 833.02. It is currently trading at 823.80, 1.11% below that high. February 17 marked the 2012 high for IWM at $83.31. It is currently trading $82.28, 1.24% below its high.

Third, as I mentioned in "The Breadth Of The Dow's 'Breakout' Is Terrible" and in other recent articles, a smaller number of very large companies are having an enormously positive influence on the performance of the major indices (Nasdaq included).

Last, the declining volume on rising prices versus the rapidly rising volume on sell-offs is sending the message that sellers, not buyers, are controlling the market. A lack of selling is helping to drive the major indices higher, rather than an overwhelming demand from the buy side. A rising market with very few sellers often begets a further rise in markets. This can be true even with relatively few buyers, as buyers are forced to bid ever higher prices in search of anyone willing to sell.

I fully understand the mantra, "The trend is your friend," and wouldn't fault anyone for wanting to stick with the uptrend. However, for those long-only investors interested in adjusting their portfolios after the nearly five-month 25%+ rally in the Dow 30, S&P 500, and Nasdaq 100 (NASDAQ:QQQ), here are a couple ideas:

Using the SPY as an example, book profits at these levels, and sell December 22, 2012 $125 puts at the current bid of $6.70. You would be locking in the SPY's 9.6% gain year-to-date, and, in a cash account, taking in an additional 5.36% in put premium. As long as the SPY closes over $125 on expiration day, your return on the year will be 14.96%.

If the market takes a turn to the downside, you will outperform those investors doing nothing at these levels. Your break-even level to the downside will be $125 minus $12.05 (2012 booked profits) minus $6.70 (ex-commissions). This comes out to $106.25 on the SPY or roughly 1,062.50 on the S&P 500, just below the October 4, 2011 lows. For those investors nervous about missing any upside in the market, consider booking profits, selling puts, and using the put premium to purchase SPY calls.

Another possibility, ideal for an investor with a large position in the SPY, DIA, or QQQ, would be to sell a series of covered calls spread out among various months and at various strike prices. The idea is similar to what fixed income investors do when building a bond ladder and would be structured according to your beliefs about how the year will play itself out.

For instance, again using the SPY as an example, an investor could break a 1,000 share position into the following: sell two March 30, 2012 $140 calls (current bid 97 cents), sell two May 19, 2012 $145 calls (current bid 93 cents), sell two June 29, 2012 $150 calls (current bid 63 cents), sell two September 22, 2012 $155 calls (current bid 82 cents), sell two December 22, 2012 $160 calls (current bid 93 cents). If any of the call options expire worthless, you could choose to roll them over into other covered calls. Remember that there is a possibility of getting assigned. You should therefore be comfortable with the possibility of selling your shares at the strike prices you choose.

A third idea is to simply sell at-the-money December 31, 2012 calls. At the moment, the SPY December 31, 2012 $138 calls are bidding $8.79. By selling these calls, you would be hedging your position by roughly 6.4% and also allowing for a total 2012 return of 16.96% (excluding dividends and commissions).

I recognize that with volatility levels as low as they are, it doesn't seem like the ideal time to sell options. However, for an investor with a long-only bias, an investor willing to book profits at these levels, but only if the portfolio remains hedged to the upside in some fashion, selling puts at today's volatility levels is acceptable.

After all, by holding onto a long position, rather than booking profits in shares of SPY, your potential loss would be greater than if you instead sold out-of-the-money puts and had to worry about rising volatility levels harming the mark-to-market price of an option that will trend towards a price of zero as expiration approaches.

Good luck and happy investing!

Source: Adding Perspective On Dow 13,000