Dow finishes at highest level since April as blue-chip gauge nears bear-market exit. Here's why investors should take this with a grain of salt

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The Dow Jones Industrial Average finished Friday's session at its highest closing level since late April, according to Dow Jones Market Data, and is on the...

The Dow Jones Industrial Average finished Friday’s session at its highest closing level since late April, according to Dow Jones Market Data, and is on the cusp of exiting “bear market” territory — at least, based on one technical indicator. But that doesn’t mean that equity investors can breath easier. In fact, it could mean just the opposite.

But before investors get too excited, just because stocks have rallied sharply doesn’t mean that they will continue to climb. Recent history is replete with similar examples, most notably in the wake of the dot-com crash, as MarketWatch has reported. During drawn-out recessionary bear markets, stocks often rip higher, only to see their gains fizzle again and again. This has already happened more than three times since the start of the year, including notable counter-rallies that occurred in March, in July and August, and again since mid-October, according to FactSet data.

As the Dow made new highs on Friday, one UBS markets strategist warned that investors should anticipate more volatility.

 

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