Just watched the closing of todays market and there was a cheer from the floor traders as the DOW managed to stay just above 10,000. Rhonda the talking head at CNN pointed this out and also some market guy she was interviewing said that if the DOW stayed/closed below 10,000 that it would signal a Bear market. Why is this 10,000 figure such a big deal? Is it just that this number will get a lot of press spooking the masses? T.

-- Tom (Tswft@aol.com), February 24, 2000

Answers

Tom,

I don't think there is anything magical about 10,000. It is one of those "psychological" things - like the year 2000 -- a big, round number.

-- No Polly (nopolly@hotmail.com), February 24, 2000.

It's a psychological benchmark - going from a 5-digit to a 4-digit Dow. The bear market is here.

-- Y2kObserver (Y2kObserver@nowhere.com), February 24, 2000.

Dow seems to have caught its leg in the bear trap this year, but the DAQ has sprung wings and has learned to fly. And we all know what moths do.

-- canthappen (n@ysayer.com), February 24, 2000.

Tom:

>> Why is The Dow at 10,000 such a big deal? <<

Markets run on psychology as much as on money. What no one knows in advance is how any particular event will affect psychology, since psychology is complex and each single event is actually a matrix of many events.

My own opinion is that many small investors will take a sub-10,000 DJIA in stride. At the fag end of a 17-year bull market it takes an event with real weight to push complacence into fear. The crossing of 10,000 on the way down is a lightweight event and it will just be part of the set-up for the eventual change in market psychology to bearishness. If it has any meaning, it is just an *unmistakeable* signpost of the market's direction and the size of the fall to date.

It will just add one more datum to the pile of evidence that things are not what they used to be. It may prompt them to spend a couple of moments thinking on how much farther it can fall before they want out.

The big question is whether the coming bear market lets them down slowly, 600 DJIA points a month, or snatches the rug out from under them quickly, losing 3000-3500 or more in 5-8 days and cracking heads wide open.

So long as the DJIA and the NASDAQ diverge this way, the bitter end has not come upon us. It will.

-- Brian McLaughlin (brianm@ims.com), February 24, 2000.

TOM:

In a rationally-based market your question is well made: What's the difference between 10,000 and 9,999? --- numbers are just markers in a continuum. To a logic machine the drop is a mere one ten thousandth.

But this is now a psychologically-based market, considering that the fundamentals no longer support its late inning stretches. We 're not dealing with logic here -- we're dealing with human emotions, in particular fear, the latter enhanced by the fact that so many of the newly-arrived players are rank amateurs.

The story's been told before. Watch for a replay.

Bill

-- William J. Schenker, MD (wjs@linkfast.net), February 24, 2000.

Because they wore baseball caps "DOW 10,000" on the way up.

Now they can wear them again!

-- W (me@home.now), February 24, 2000.

Bill and Brian, like in the '20s you mean..hehe. W...LOL

-- canthappen (n@ysayer.com), February 24, 2000.

Totally psychological. Wait until it hits 8400...

-- Mad Monk (madmonk@hawaiian.net), February 24, 2000.

Same reason that everything in the store is priced 9.99 or .49 instead of round numbers. Psychological.

-- Guy Daley (guydaley@bwn.net), February 24, 2000.

The dow is going down because it is for a bunch of geezers. Its day is over. The Nasdaq is going up because it is the choice of today's active young people.

-- C Dude (C@guy.man), February 24, 2000.