Dow at 13,000 worries some

Associated Press

NEW YORK

What’s not to like about Dow 13,000?

Though most investors cheered when the blue-chip index closed above that level Tuesday for the first time since May 2008, some were wringing their hands. The Dow Jones industrial average has left the Dow transportation average behind, and that could be trouble.

“There’s a risk that stocks could slide,” says Bruce McCain, chief strategist at Key Private Bank. Adds Dennis Slothower, editor of the investor newsletter Stealth Stock Daily: “When the Dow leads everything else, that’s not a healthy sign.”

The rap on the Dow is that it tracks the biggest, most financially stable companies. Technical analysts, who study previous stock movements to anticipate future ones, say you have to look at other indexes, too.

Take the Dow Jones transportation average, the granddaddy of indexes, which traces its origins to 1884. It tracks railroads, shipping companies and airlines — the businesses that move people and goods through the economy.

This collection of 20 stocks fell 3 percent in February, counting reinvested dividends, while the better-known Dow Jones industrial average rose 2.5 percent. Since last April, the high for most indexes last year, the transports have dropped 6 percent, compared with a 1.2 percent gain for the Dow.

Technical analysts say that if one index reaches a high and the other doesn’t, that means the rally could falter. They say that’s what happened before stocks tanked in 1929, 1937 and 2000.

The analysts disagree over how much to worry now. And the Dow is not the only index climbing fast. A day after the Dow closed at 13,005, the Nasdaq composite index of technology stocks briefly broke through 3,000 for the first time in 11 years.

There are worrisome signs that the rally may not last:

The price of gas is up, too. Some investors believe gas prices are the biggest threat to the rally because when people pay more at the pump, they often spend less elsewhere.

The Russell 2,000 is still off its high.

Traders are scarce.

Main Street still isn’t bullish. Investors pulled $137 billion from U.S. stock mutual funds from last June through January, according to Strategic Insight, an industry consulting group.