Is the Dow About to Play Catch-up?
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)
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter