Saturday, March 15, 2008


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The Dow Jones Industrial Average Index (DJIA) is maintained and reviewed by editors of The Wall Street Journal. The first time the DJIA index was published on May 26, 1896 as a basket of twelve industrial stocks. The number of DJI stocks included into the index was increased to 20 in 1916 and to 30 stocks in 1928, as it remains by today.

The same as almost hundred years ago, the Dow Jones Industrial Average consists of 30 of the biggest public companies in the United States. Yet, the total number of public companies traded on the U.S. stock market is far above the number that was in 1928. Even the Dow index is one of the most watched and analyzed indexes over the world more and more analysts consider S&P 500 index as a better thermometer of the U.S. stock market.

Still, the simple fact that DJI index is one of the most analyzed indexes in the world places the DJI index into the position when the index movement may affect the stock market sentiment. Very often the bad news in the DJI sector may drug the whole U.S. market down and that is the main factor why many technical analysts still donate a lot of time to the DJI analysis in spite the fact that S&P 500 is considered better when it comes to describe the US stock market sentiment.

Beside the financial analysts who analyses U.S. economy and U.S. equities market, there are many financial advisors, institutional and retail traders who rely on the DJI technical analysis for the trading purposes connected directly with the Dow index investing.

One of the most popular DJI investing is trading DIA – very often called as DJI index tracking stock. The DIA is an Exchange trading Fund that track the performance of the Dow Jones Industrials Average index.

Another popular way to invest into the Dow index is the DJX options (Dow Jones Industrial Averages Index Options) which allow speculating on future Dow movements. Dow e-mini futures trading is another investing type that attract high risk speculators.

Even pension funds have found a way to invest into the Dow index trough index tracking funds. The Rydex funds are considered one of the most popular funds that allow investing IRA and 401k account into DIJ on margin (by using dynamic or double Dow funds) and trade Bear market (by using inverse DOW funds).

Of course, the direct trading of the stocks from the DJI index basked is considered as investing into the index as well and here the DJI index analysis could become handy as additional to the stock analysis.

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