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The benchmark Dow Jones index did something that it hasn’t done all year – string together seven consecutive up sessions. Not only that, the moves were fairly significant considering the circumstances. Since the close of May 3rd, the index gained 3.8%.

But despite the much-needed sentiment boost, the Dow Jones is only barely above parity for the year. The real question now is whether or not the equity markets can deliver substantive performance from here. After all, no one invests in the markets merely to have their money go sideways.

How likely is it that the Dow Jones continues its newfound momentum? I believe a big part of the recent favorable price action is Apple’s journey to being the first company with a trillion-dollar market capitalization. The risk in buying this rally, though, is that once such a psychological level has been achieved, the tendency is to sell off the enthusiasm.

Recall the first time that Amazon hit a $1,000 share price. It had a few sessions in four-digits before succumbing to technical trading. AMZN spent several months in a declining to horizontal consolidation pattern before reaching its unbelievable heights today.

But will Apple follow this same route? It’s difficult to have confidence in this idea since the iPhone is competing in a heavily saturated industry. Also, the company’s other products have produced mixed success.

Also, another factor that makes me question the Dow Jones rally is the bond market. While equities were enjoying its robust week, the ratio between the 30-year and 10-year Treasury yields fell to an all-new 2018 low of 1.044. In other words, buying the riskier 30-year note only carries a 4.4% reward premium.

Back in September of last year, that premium in the bond market was 30%!

The other sector to consider is the crude oil markets. The international benchmark Brent Crude Oil gained nearly 4.8% while the Dow Jones enjoyed its standout 3.8% run. That, however, presents problems as higher oil prices isn’t necessarily a catalyst for economic growth.

Ultimately, I think investors should be careful buying into the equities run. Although impressive, the Dow Jones is down almost 7% from its closing high this year. Not only that, the index must break decisively above the 25,000 point horizontal resistance level before we can make a judgment call.

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