Does the Dow Jones have what it takes to pull off a end of year rally?

Can you believe that year end is staring at us in the face again with less than 100 days till we leave 2015 behind. I do recall a few analysts having doubts about what sort of returns the year would bring when making predictions and I don't think there doubts have been let down so far.

Out of the entire 30 components listed on the Dow Jones Industrial Average (probably the most followed index in the world) only 7 stocks have double digit gains so far. This reflects the difficult nature most of 2015 has been as speculation has been rife around the expected date of rate hikes in the US. This after the index returned 7.5% last year which does suggest investors may be left disappointed come the end of the year.

7 Dow components have a double-digit YTD gain: Nike United Health Home Depot Visa Disney GE McDonalds

— Carl Quintanilla (@carlquintanilla) October 13, 2015

I went scrounging around for some more facts that could put context to the stat above and I came across an article listed on Traders Planet by Jerremy Alexander Newsome who perfectly summarised things that should be noted on the Dow Jones weekly namely the highest level reached ever was 18 351.36 and the low that has been registered for the year 15370.33 represents roughly 16% drop or almost 3000 point plunge which all took place over 13 weeks.

If you consider these facts it does make you feel a bit skittish about the feeling lying in the market at the moment. If participants are able to take an index to all time highs only to plunge it 16% lower you do question the confidence in move higher.

However Jerremy does express his opinion that we could see a repeat of the price action that took place in 2011 with an end of year rally which he sees very likely. But the most important thing for me was his acknowledgement that if the index didn't go higher he had a plan for the downward phase it could produce. This is key to trading, knowing exactly which each one lies and playing whichever shows the strength.

$DJIA 9 important facts you need to know about the Dow http://t.co/agm4I6exlm @newsomenuggets pic.twitter.com/1lq1KA3YHz

— TraderPlanet (@TraderPlanet) October 13, 2015

I think its clear that if we are going to see any kind of rally into the end of year we need to start forming solid foundations for the bulls to build on. Right now that doesn't seem to be the case but we also have to be fair in our assessment and recognize that we've seen a big gain happen last week so it would be good to see a pullback but the true test will prove if the bulls take advantage of this and nibble at the price at lower levels.