The Dow Finishes Higher, but the Bull Market Needs 17,000 Back

The problem with milestones is that they can affect psychology both ways.

Jul 9, 2014 at 9:03PM

The Dow Jones Industrials (DJINDICES:^DJI) bounced back from losses earlier in the week, as the release of the minutes from the latest Federal Reserve meeting prompted investors to become more confident that the five-year-old bull market could have further to run before tighter monetary policy takes away some of the tailwinds that have helped push the Dow higher. Yet today's gain of almost 79 points proved insufficient for the Dow to reclaim the 17,000 mark, and as arbitrary as that milestone might seem, the success of the bull market depends on the Dow climbing back above that hard-fought level without a lot of delay. Despite favorable performance from Dow components Disney (NYSE:DIS) and Nike (NYSE:NKE) today, the Dow's long spell without a major correction still looms on investor sentiment as shareholders try to position themselves for whatever may come for the rest of 2014.

Dis Star Wars
Source: Disney.

Disney gained 1.6%, with the primary catalyst coming despite somewhat tepid analyst coverage from Barclays. The analyst gave the entertainment giant an equal-weight rating, with a price target that's more than $2 per share below where the stock currently trades. More importantly, Barclays believed that a couple of Disney's competitors in the media space deserved more favorable ratings, including network rival Fox. Disney has celebrated successes with its World Cup coverage and the ongoing prospects for blockbuster movie releases that could spur revenue increases across its multiple business lines. Yet the big question Disney faces is whether it will be able to release content directly to viewers, or whether it will have to go through intermediaries to deliver content that could take away some of Disney's profit potential.

Nke Logo

Source: Nike.

Nike climbed 1.3%. The athletic shoe and apparel leader made a strategic move today that many are interpreting as marking a key turning point in the industry, as Nike chose not to go after a renewal of its sponsorship relationship with English Premier League club Manchester United. With its current deal expiring in 2015, Nike will reportedly give up the sponsorship opportunity to rival Adidas, with a future decade-long deal potentially costing Adidas as much as 750 million British pounds. Some argue that the decision seems out of place with Nike's emphasis on soccer recently, with Nike's pursuit of World Cup marketing victory having taken a big hit with Brazil's exit yesterday. Yet Manchester United has seen its fortunes weaken in the past year, and it's unclear whether Man U's historical value will bounce back as the departure of former manager Sir Alex Ferguson last year left the club faring poorly during the most recent season.

The 17,000 figure is an arbitrary one for the Dow, but it still has psychological importance. The Dow needs to get back above 17,000 in order to convince investors that the bull market still has legs.

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Dan Caplinger owns shares of Walt Disney. The Motley Fool recommends BMW, Nike, and Walt Disney and owns shares of Nike and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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