Market Talk

Break out the party hats, but this isn't 1999 all over again.

What a letdown.

The Dow Jones Industrial Average crossed above 10000 for a hot second earlier this afternoon, only to revert back and hover around the 9990 level in afternoon trading. And while it’s back above 10000 currently, the joy that attended the index’s first assault on five-digits just isn’t there this time.

It’s been more than 10 years since the Dow first crossed above the psychological 10000 level, prompting Miller Tabak equity strategist Peter Boockvar to put the time frame in perspective. Back in 1999 the Backstreet Boys had the best selling album, “American Beauty” won the Oscar for best picture, the euro was established and gasoline, on average, was about $1.20/gallon.

The US dollar index was at 100.36 (now 75.60), gold was at $280 (now
$1,063), oil was $16.44 (now $74.80), the 10-year yield was 5.19% (now 3.39%), and the fed funds rate was at 4.75% (now 0-0.25%).

“Oh, how time flies,” Boockvar says.

Perhaps the biggest difference between March 1999 and today is the overall sentiment surrounding the market. As Paul noted earlier today, it seemed like everyone was making money in 1999 and the biggest worry was what to do with all those earnings.

Now, stocks are bouncing off multi-year lows after the worst financial crisis since the Great Depression. Even though Dow 10000 is pretty remarkable considering it was hovering around 6500 in June, the index is still nearly 30% off its October 2007 highs.

MarketWatch reporter Mark Hulbert astutely observes that investors don’t feel nearly as optimistic about the Dow crossing 10000 as they did in 1999.

That’s surprising, and suggests to contrarian analysts that there exists a strong wall of worry that the stock market can continue to climb — for at least a while longer.

He cites mutual fund inflows and results from investment newsletters as evidence of this “wall of worry.” Investors in September pulled more money out of mutual funds than they put in, even as stocks hit new 2009-highs. The trend has also continued throughout first half of this month, Hulbert notes.

And the average recommended equity exposure among market-timing newsletters is currently only 32.3%, Hulbert notes, citing Hulbert Financial Digest, which is lower than levels seen at the beginning of both September and October.

All this begs the question: what’s next? Can the momentum that’s propelled major indexes up more than 50% from the March lows continue through 10000? Or will the bears finally gain some traction and ignite the overdue correction that everyone’s expecting?

DJIA now up 147 at 1018 with nearly 30 minutes to go before the close.