Dow rises 5,000 points in a year for the first time ever

Key Points
  • This is the biggest annual-points gain for the Dow in its history.
  • A 140-point rally Monday sent it to an all-time high and pushed it to the 5,000-point milestone.
  • "It's getting a bit extended, but I think it has more room to run," says MKM Partners' Jonathan Krinsky.
Tax bill driving market momentum
Tax bill driving market momentum

The Dow Jones industrial average just did something it has never done in its 121-year history.

The 30-stock average is now up more than 5,000 points in a year, marking its biggest annual-points gain ever. This following a 140-point rally Monday which sent it to an all-time high.

The Dow also notched a record close for the 70th time this year, which is another milestone. To put that into perspective, it means that about one of every four trading sessions this year has been a record close for the index.

The Dow, along with the and the Nasdaq composite, has had a banner year, rising 25.5 percent. The S&P 500 and Nasdaq are up 20.2 percent and 29.9 percent, respectively.

Dow's biggest annual point moves

Year Annual point gain

To be sure, most of the big point moves are in recent years for an obvious reason: The Dow is much bigger than it was decades ago. So investors should keep this point move in perspective.

Jonathan Krinsky, chief market technician at MKM Partners, noted the spread between the Dow's price and its 200-day moving average — a key technical indicator — was about 13 percent. "It's getting a bit extended, but I think it has more room to run."

He said some of the indicators on the S&P 500 — which typically matches the Dow's performance on a yearly basis — are reaching extreme "overbought" territory.

"One indicator that has been talked about lately is weekly RSI, which has now exceeded 80 for the first time since 1995," he said in a note. "While basic intuition might suggest this to be a bearish development, the stats tell a different story. Since 1928, this has happened on twelve other occurrences, and the SPX was higher every instance at some point either three, six, or twelve months later."

Wall Street is generally bullish on stocks heading into next year, but do not expect a repeat of this year. Strategists, on average, expect a 5 percent increase on the S&P 500.

— CNBC's Peter Schacknow and Robert Hum contributed to this report.