Indicator Suggests Dow 16,500 by Next Year

The Dow Theory has been around for years a many of the old schoolers on the Street like to follow the philosophy. The jist is that when the Dow Jones Industrials and the Dow Jones Transports both make new highs it is bullish for the market.

This occurred in the last few days and according to the research it shows that the median return for the market after this occurs is 16% over the next 12 months.

I follow the S&P 500 much closer than the Dow and a gain of 16% in that index would put it at 1791, well into record territory and based on 2013 earnings estimates the index would be trading with a P/E ratio of 15.8, slightly above the historical average.

When put into perspective it sounds like an achievable goal!