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Is the Dow About to Play Catch-up?

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He ain't heavy, he's my Dow Jones Industrial Average. The only problem with that? The Dow is heavy; loaded down with stocks with weak technicals and poor patterns even as 70% of the stocks that make up that index are now on point & figure buy signals.

Some have recently remarked that the fact that the Dow has yet to make a new high while the broader S&P 500 and other index measures have made new highs is a sign the market's recent advance is doomed to failure. This may or may not be true. What is true, however, is that when you have an index comprised of technically weak stocks, the probability of that index moving higher is greatly reduced.

Let's look at some of the components of the Dow that appear vulnerable to me on a point & figure basis. There are some technically sound stocks in the Dow, notably Boeing (BA) and Caterpillar (CAT), but there are enough negative patterns that appear likely to provide a drag on the index going forward.

All charts courtesy Dorsey, Wright & Associates.

Alcoa Inc. (AA)

American International Group, Inc. (AIG)

Citigroup, Inc. (C)

General Motors Corporation (GM)

International Business Machines (IBM)

JP Morgan Chase (JPM)

3M Company (MMM)

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No positions in stocks mentioned.

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