Study: Keeping Dow Above 10,000 Could be Tough

December 30, 2003 ( - If investing history is to be a guide for the future, don't look for the Dow Jones Industrial Average to climb above the 10,000 mark and stay there over the long term anytime soon.

According to a recent Smith Barney study, it could be as long as two decades before the market pushes past the psychologically important investing benchmark as part of a sustained growth rally, Reuters reported.

Alan Shaw, a technical analyst at Smith Barney, who authored the study found the average first closed above what investors then must have viewed as the significant 100 level in 1906. But though it flirted with that dizzying height several times in subsequent years, it “proved a market ceiling until 1924,” Shaw said in the report.

During those 18 years before the average broke through 100 with conviction, Smith Barney counted five cyclical bear markets, a decline of 20% or more, and four cyclical bull markets, until the fourth matured into the bull trend of the 1920s.   The pattern was repeated decades later when the 1,000 level became another tough sell to investors.

The average came within points of that milestone in February 1966 and again in December 1968, but only broke through that milestone in January 1973, according to Shaw. Like the 100 mark though, the 1,000 point level had been an upside barrier for 17 years, Shaw said, and investors endured another five bear markets and four bull markets.