The Dow is doing something it hasn’t done since the '80s, and it could signal new highs

The Dow Jones industrial average has not closed below its 200-day moving average for 472 sessions, its longest stretch since its streak from 1984 to 1987 and its seventh-best on record.

This time, the setup for markets looks a little different to times past, according to analyst Michael Bapis.

"Fundamentally it looks good, and that's what's different than many of these other periods where it has been above the 200-day moving average for so long," Bapis, partner and managing director at the Bapis Group at HighTower Advisors, told CNBC's "Trading Nation" on Monday. "Earnings are still strong, dividend yields are still high and the economy is really growing."

The first-quarter earnings season is drawing to a close with the strongest results in seven years as S&P 500 companies track a combined 26 percent increase to their bottom lines. Meanwhile, the U.S. economy is set to expand by 2.7 percent in 2018, 40 basis points above the 2017 growth rate.

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While the Dow has not closed below its 200-day support level, it has tested it on an intraday basis, noted Ari Wald, head of technical analysis at Oppenheimer. The Dow broke below its ascending 200-day moving average in early April and, most recently, on May 3 and 4. It then bounced back.

"Since that successful test, which created a higher low, we've now reversed this trend of lower highs that we've been in since January," Wald said. "When you add it all up, we think this correction that we've been in since January is coming to an end and we think we're now set up for the inflection higher."

Its May low was higher than the one set in April. Monday's intraday high was the Dow's best since mid-March.

The Dow last hit a record high on Jan. 26. It remains nearly 7 percent below that all-time high. The blue-chip index has managed to reverse year-to-date lows and now trades slightly higher for 2018.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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