What to watch
Stocks confront ceiling at big round numbers
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.