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Stocks con­front ceil­ing at big round num­bers

Chicago Sun-Times - - AMERICA’S MARKETS - @ adamshell USA TO­DAY Adam Shell

Af­ter a rous­ing rally off the lows on Feb. 11, the law of big round num­bers may fi­nally be catch­ing up with ma­jor U. S. stock in­dexes such as the Dow Jones in­dus­trial av­er­age and S& P 500.

The num­bers in ques­tion are 17,000 on the Dow and 2,000 on the S& P 500.

It’s not un­usual for ma­jor in­dexes such as the Dow and S& P 500 that suf­fer steep down­turns to have trou­ble break­ing back above prior mile­stone mark­ers in the mar­ket on the way back up.

In Wall Street- speak, it is called “over­head re­sis­tance.” Ba­si­cally, what makes it dif­fi­cult for the Dow to bang through an old key level like, say, 17,000, is that many in­vestors were likely buy­ers of stocks around this level and so will use the rally back to old lev­els as a good time to exit their once- los­ing po­si­tion, re­coup their losses and get their cash back when they are back to even.

Fri­day, both the blue- chip Dow and the large- com­pany S& P 500 topped the 17,000 and 2,000 lev­els, re­spec­tively, al­though only the Dow closed above its key mile­stone.

If both stock in­dexes can break out above th­ese key lev­els for good, it would be a bullish sign for the mar­ket.

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