Where is DOW Jones Industrial Average heading?

The DOW Jones Industrial Average, simply known as DOW, was created in 1896. It consists of 30 publicly traded large companies based in the United States and commonly referred to as a blue-chip average. Therefore, it is one of the widely used barometers of the U.S. economy.

It has been deteriorating within the last five years based on concerns over U.S. economic recovery mainly job creation and concerns over European debt crisis spilling over to the U.S. However, the broader market has seen double digit earnings growth in 2011 signaling an economic recovery in the U.S. Last trading day before this writing which was Friday, February 17, 2012, the DOW Jones Industrial Average closed at 12,949.87, a 45.79 point (0.35%) higher than the previous day closing.

The entire financial industry is closely watching the performance of the DOW especially less than a year before the U.S. elections. Based on analyses of available data for more than a century, experts are predicting that DOW will hit 15,000 in two years. Whether this is based on 141 years of data that suggest certain DOW cycles or not, it is an indicator that the U.S. economy is heading the right direction.