After trying and failing all week, they managed to push the Dow Jones Industrial Average above the 16,000 level at the closing bell thanks to indications from the Bank of Japan that more cheap money stimulus could be forthcoming — despite the fact that its positive assessment of the Japanese economy remains unchanged. A liquidity injection by the People’s Bank of China overnight (albeit at a higher interest rate) also helped.
While all looks tranquil on the surface, it wasn’t a “clean” breakout: There are a number of concerns as the market looks increasingly vulnerable here. Call me cynical, but Dow 16,000 looks like a ploy by insiders to dump shares on retail investors ahead of a fall. CEOs and professional traders have had a strong selling bias for months according to data on share repurchases vs. issuances and hedging activity in the futures market.
Here are three problems with Dow 16,000, and three charts to illustrate the point.