The Dow has risen nearly 25% this year; if it does the same next year it will make 20,000. That would put it on an historically very expensive footing and ripe for a crash, but it seems to be getting over its QE taper jitters, responding very positively to the good employment numbers on Friday, so I think this level is perfectly achievable. The Dow recently broke through 16,000 for the first time and has now dipped below again. It is common for the index to fail to break through decisively at the first attempt when breaching new psychological barriers, but we are now primed for further progress and a Christmas rally could well be in the offing. There is no sign of an interest rate rise yet from the Fed which would scupper the rally by increasing company costs, but the Fed rate is not the only important one. The market dictates bond yields (the interest rate charged on government debt) and it could be this which finally pulls the plug on the stock market rally. The US (and the rest of the Western world) is far too heavily indebted and, if the bond market starts to worry about getting its money back, a crisis could be just around the corner similar to the ones we have already seen with Greece, Ireland, Cyprus and Portugal (only MUCH bigger).
