Too Many Calls for Dow 10,000? Probably

For years, I have heard members of the financial media completely ignore the intraday highs and lows of the various indices, focusing instead and exclusively on closing price levels. Why? Beats me. Furthermore, when the intraday levels aren't being ignored, they are typically confused with closing highs and lows.

As someone whose livelihood is based on such distinctions, I haven't exactly been idly sitting by. To the contrary, over the past decade I have made it my own personal crusade -- my cross to bear -- to clarify the difference between closing and intraday levels in an effort to put an end to the most persistent and egregious abuses. You think I'm kidding? Just ask my friend, Bob Pisani, of CNBC.

(Of course I'd also like to get the commentators on CNBC to stop abusing the term "begs the question." But that's a whole 'nother matter. (And, no, that doesn't "beg the question" of "what were they doing wrong?"))

Back to the intraday vs. closing levels. Things are decidedly different today (and I will take a small measure of credit for that change). If you listen to the media chatter, you will hear almost nonstop talk about the likelihood of a run to Dow 10,000 on an intraday basis. Yes, intraday. The idea that an index might reach a level during the day but not close above it is finally getting some attention. Of course, it happens all the time, and those intraday highs are important; in fact, in my work they are more important than closing levels in determining the satisfaction of objectives and retracements, etc. That means they are better guides for determining entries and exits -- especially for short-term trading, which is primarily what I do.

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At the time of publication, Schiller was long Dow and Russell 2000 mutual funds up to 15% levels; long HPQ bull spreads, long UYG, long bull spreads in DJX calls, bullish credit spreads in SPY puts; bearish credit spreads in the November DJX 103 calls, although holdings can change at any time.

Dr. Harry Schiller is a Registered Investment Advisor with the California Dept. of Corporations. He holds a Series 7 General Securities license as well as a Series 4 Options Principal license. He has been owner and editor of the Short Term Consensus Hotline since 1988. For more information, see www.harryschiller.com. Under no circumstances does the information in this commentary represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.