What was this milestone, you ask? It was Double Day — the first day that the U.S. stock market closed more than 100 percent above the pandemic low to which it had plummeted on March 23 of last year after falling 35 percent in six weeks.
The reason you didn’t hear about Double Day is that the indicator that I’m using to announce its arrival, the Wilshire 5000 Total Market Index, isn’t as widely recognized as it should be.
Another reason for the lack of celebration is that the market indicators that most people and most financial journalists use — the Dow and the S&P 500 index — haven’t doubled. In fact, they’re not likely to double anytime in the next few days.
Let me explain.
The reason I like the Wilshire 5K as an indicator is that Wilshire, which sponsors the index, talks about index changes in dollars, not in points the way the S&P and Dow do. To me, dollars are a much better — and much simpler — indicator than Dow or S&P 500 points.
On Friday, Wilshire said that the 5K had closed 100.5 percent — approximately $23.7 trillion — above its March 23 bottom. That was the first time that it had doubled from its low point.
The 5K is a far more accurate indicator of the total market than the 30-stock Dow or the 505-stock S&P 500. (Yes, the S&P has more than 500 stocks because some of the companies in it have more than one class of shares.) The 5K includes 3,601 stocks, not just a relative handful of large companies the way the Dow and the S&P do.
And in the 15 months since the market bottomed, small stocks have risen far more rapidly than larger stocks have. Wilshire Managing Director Robert Waid says that Wilshire’s small-cap index was up 133.9 percent from the market bottom through Friday and that its micro-cap index was up 166.8 percent.
These stocks are the reason that the 5K (slightly) more than doubled while the S&P was up only — only! — 91.3 percent from last year’s low, and that the Dow was up 85.2 percent. So both the S&P and the Dow have quite a ways to go before doubling.
I don’t know where the stock market goes from here — no one knows.
What I do know is that I didn’t expect to see Double Day a mere 15 months after the market bottomed. So enjoy it while you can.
And if sometime down the road, you see that the S&P or the Dow has hit a Double Day of its own, remember that you read it here first.