The Big Test of a Market Top

by: Teresa Lo

Since 2001, investors have been told over and over that they can expect equities to post unimpressive returns for years to come. Many technicians have been bearish on the U.S. stock market and have paid dearly for their views.

When Smith Barney eliminated their entire U.S. technical analysis team back in February 2005, ostensibly to cut costs, speculation was rife that the real reason behind the move was the lack of bullishness. In November 2005, their former leader explained her views in a telling interview with Kate Welling of Weedenco, aptly named Louise Yamada Resurfaces.

With the Dow Industrials near the all-time high set back in 2000, you can 1) imagine the stress of all those with professional reputations at stake, and 2) hear the prayers of those who need the Dow to blow apart and fail this test of top.

Will Dow 10,000 be the new Dow 1,000 wall that held for over a decade? Only the hairdresser knows for sure.