Analyst: Dow 20K Is Nothing But A Nice, Round Number

The Dow Jones Industrial remains within 100 points of reaching the Dow 20,000 milestone, but one analyst thinks this isn't necessarily reason to celebrate.

Michael Purves is the chief global strategist and head of derivatives research for Weeden & Co. On Wednesday, he was a guest on CNBC's "Worldwide Exchange" segment to explain why investors should look beyond Dow 20K.

According to Purves, the Dow hitting 20,000 is one of the least significant data points he is tracking, because it is merely a "big round number and is nice." This isn't to say he doesn't expect the market to hit the milestone in the near term, rather, the market will continue moving higher.

Purves continued that the technical composition of the market is very favorable for the market to continue growing beyond 20,000. Specifically, materials and industrials are performing well, the banking sector is performing well along with small cap stocks. In addition, realized correlations across stocks and sectors are breaking down.

"All that to me is a sign that the equity market has some real strength," he said.

Now What?

Purves continued that the market has shifted from one defined by monetary stimulus toward a market defined by fiscal stimulus, which will present a "choppier market" but one that will be "richer for alpha conditions."

In other words, the market will be more difficult for the passive money and reward investors who can generate and identify alpha — a term used to describe an investment's performance compared to a benchmark.