It'll be interesting to see if Robert Johnson, director of economic analysis for Morningstar, will regret his assertion that it wouldn't be surprising if the Dow were to linger in the 13,500 to 14,500 range for some time.
The few times the Dow has surpassed 14,000 in the past, it wasn't long afterwards that it came plummeting down in a most aggressive manner. Johnson says he doesn't think that will happen this time around based upon his belief the economy is stronger than in the past when it hit those numbers.
He cited a stronger banking system and housing market as the main indicators for his outlook.
Johnson also sees stocks as being valued in line with the reality of the performance of the companies rather than being overvalued.
The major problem is most of the outperformance of publicly traded companies in the earnings season has come from cost cutting, even though revenue is up so far with the companies listed in the S&P 500 by 1.2 percent.
It's hard to understand why the Dow is approaching record territory with the very weak global and U.S. economy. There is no doubt the Dow will come crashing down, but it may have more legs on it than bears are thinking at this time.
Even so, this performance is living on borrowed time, as Spain remains a disaster in Europe, the U.S. economy contracted last quarter, the jobless rate for the week ending January 26 jumped by 38,000, and when including people claiming benefits from all programs at the end of the week on January 12, it soared to 5,914,983, a boost of 255,501 from the prior week.
How that is interpreted as something that has legs and isn't a major challenge has to be related to wishful thinking rather than facing reality.