Wednesday, April 30, 2008

DJI Stock Listing

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The DOW Index (Dow Jones Industrials or DJI) consists on 30 biggest public U.S, companies, 28 of which are traded on the New York Stock Exchange and 2 (Microsoft and Intel) on the NASDAQ Exchange.

The DJI index was lunched on May 26, 1896 and at that time it was a basket of 11 stocks. On October. 7, 1896 the Dow Jones Industrials index was increased to 20 stocks and in 1928 the DJI index was expended to 30 companies.

Below you may see the list of these 30 DJI Stocks as of April 30, 2008. This is an outdated listing, yet it may give you the picture of what companies are selected into DJI index. For most recent listing I would recommend visiting the Dow Jones web site

MMM3M Co.Diversified IndustrialsNYSE
AAAlcoa Inc.AluminumNYSE
AXPAmerican Express Co.Consumer FinanceNYSE
AIGAmerican International Group Inc.Full Line InsuranceNYSE
TAT&T Inc.Fixed Line TelecommunicationsNYSE
BACBank of America Corp.BanksNYSE
BABoeing Co.AerospaceNYSE
CATCaterpillar Inc.Commercial Vehicles & TrucksNYSE
CVXChevron Corp.Integrated Oil & GasNYSE
CCitigroup Inc.BanksNYSE
KOCoca-Cola Co.Soft DrinksNYSE
DDE.I. DuPont de Nemours & Co.Commodity ChemicalsNYSE
XOMExxon Mobil Corp.Integrated Oil & GasNYSE
GEGeneral Electric Co.Diversified IndustrialsNYSE
GMGeneral Motors Corp.AutomobilesNYSE
HPQHewlett-Packard Co.Computer HardwareNYSE
HDHome Depot Inc.Home Improvement RetailersNYSE
INTCIntel Corp.SemiconductorsNASDAQ
IBMInternational Business Machines Corp.Computer ServicesNYSE
JNJJohnson & JohnsonPharmaceuticalsNYSE
JPMJPMorgan Chase & Co.BanksNYSE
MCDMcDonald's Corp.Restaurants & BarsNYSE
MRKMerck & Co. Inc.PharmaceuticalsNYSE
MSFTMicrosoft Corp.SoftwareNASDAQ
PFEPfizer Inc.PharmaceuticalsNYSE
PGProcter & Gamble Co.Nondurable Household ProductsNYSE
UTXUnited Technologies Corp.AerospaceNYSE
VZVerizon Communications Inc.Fixed Line TelecommunicationsNYSE
WMTWal-Mart Stores Inc.Broadline RetailersNYSE
DISWalt Disney Co.Broadcasting & EntertainmentNYSE

Saturday, April 26, 2008

VIX Index

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I have stated in my previous "DJI chart" post about the possibility of the short term correction which could be caused by the high volume during the index up move on April 18, 2008. It’s difficult to say that April 22, 2008 – one day decline could be considered as a correction. Overall I would say we saw flat with small rise market over the last week.

Analyzing 60-day chart I may say that the technical indicators look positive. Yet, we start to see some negative alerts. The first negative point is that Advance/decline issues and volume oscillators started to decline telling us that we could be in the stage when the market is oversold in short-term and we may see the correction down. Second negative point is that now, we have even bigger than the last week positive MVO. We may expect that high volume on April 18 and April 23-24, 2008 may reverse the stock market down into correction.

The positive is that we still see rising SBV, RSI and Stochastics. The biggest positive factor on my opinion is that the VIX (volatility index) is below 20 now. The last time we saw VIX below 20 on December 26, 2007. This is a good sign that the fear is down and we may face the continuation of the recovery.

I consider the VIX index as an indicator of the market stages. As a rule I use it to adjust the indicators I use in my technical analysis. I believe, that in order to achieve the better result and avoid big loses a trader has to define clearly the periods when his/her technical indicators works the best and isolate the periods when the indicators do not work. Without doubt the VIX helps me mathematically identify these periods.

In overall I am still on the side of the recovery. I still believe that the market is heavily oversold and we should see the S&P 500, NASDAQ 100 and DJI indexes higher. Yet, taking into account the high volume over the last 2 week, I consider that there is a high possibility of the correctional move down. Should we face it, most likely it will be the correction within the dominant recovery.

Sorry, no chart today.

Sunday, April 20, 2008

DJI Chart

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As I have mentioned in my last "DJI Volume" post the DJI high volume surge on April 11, 2008 had pushed the market higher. My point that the decline started on April 8, 2008 could be a short lived (see last paragraph in my "Technical Analysis" post on April 6, 2008) has been confirmed by the strong recovery - the Nasdaq 100 and DJI indexes have broke the February 2, 2008 high (the S&P 500 index is still below. )

I think the recovery trend has defined itself very clearly. For those who still believe in recession I may only say – yes…, maybe…, yet I do not think now. I do not look for a year ahead. Maybe, we are in the global recession and the stock market will be lower in a year… However, I do not think it is going to happen "tomorrow". First, I think we have to see some recovery as reaction on January and March huge volume release, then we will see – that is why we analyze charts on daily basis.
Taking look at the current chart I may say that result of my technical analysis based on the NASDAQ 100, DJI and S&P 500 is bullish. All my technical indicators on all three indexes are positive: VIX is dropping, SBV and advance decline oscillators are moving up, average volume is lover then in January – March period, RSI and Stochastics are above 70 and 80 respectively.

One thing that disturb me is that I start to see growing MVO(5,25,3) on the 60-day chart, which reveals me that we have growing volume in relation to the average volume over the last 25 trading hours. The same as on April 11, 2008 I may say that this volume may push the market in the correction. Again, I would not expect to see the correction until MVO is back to the zero line – only then I would consider the increased possibility of the correction.

Overall I would say that I would expect the indexes to move higher or move flat, to the point when I see MVO(5,25,3) on the 60-day chart equal zero. Then I would check the chart to consider the possibility of the correction.

The most positive factor in the recent correction down (April 8 – 14, 2008) for me is that the stock market was pushed into this correction by the big volume generated during the indexes up-move on April 1st, 2008. The big MVO could be noted on all indexes including NASDAQ 100, DJI and S&P 500. However, the stock market was reversed on the mach smaller volume surge during the index down move on April 11, 2008. The only big negative MVO could be seen in the DJI sector on that day. That tells me that the stock market is in the stage when the big volume is required to push it down and much smaller volume is required to reverse it back into up-trend. The "news lowers" and "news followers" could notice as well that the stock market started to react on the positive news much stronger then on negative news… All of this I consider as confirmation of the development of the recovery.


Sunday, April 13, 2008

DJI Volume

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As I expected in my last "Technical Analysis" report, the market dropped down. The question I can put now could be "Is there a possibility that the current move down could develop in something stronger and push stock market lower towards the January 23rd and March 17th lows or this is just a healthy correction within the mid-term down-trend?"

There are several factors that points in the favor of the further slide as well as there are a few points that tells that the stock market may reverse soon back into up-trend.

First of all the index based technical indicators are still bearish and point to the higher possibility of the further slide over the next few trading session. I have pointed in the previous repos that the volume surge generated during the index up-move on April 1-2, 2008 (see green MVO) may push the market down, and now we see the U.S. indexes in the correction. The good news is that we may see the equally high volume surge during the index drop on the Dow Jones Industrials (DJI) (see red MVO) – very strong volume to the DJI down-side and very good sign for a reversal in the near future; however, we still see nothing in the NASDAQ 100 and S&P 500 market sectors. That’s why I’m still concern about possibility of the further slide.

Over the mid-term I’m still on the side of the up-trend. It is still difficult for me to believe that the huge volume of the shares that was dumped on the market in January and March 2008 is already processed by the stock market. I think everybody agrees that majority of traders, and portfolio managers were selling in this period, yet there was a second group of (I believe small and powerful) of traders who bought this huge amount of shares and now the stock market may go into further recession (on my opinion) only after this second group of traders start to sell these shares…


Sunday, April 6, 2008

Technical Analysis and Media

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Haven't been making any posts for the last two weeks. If you read my previous post you may see how skeptical I was about all this noise in the media about recession. The same as before, my view on the market is that the January 22-23, 2008 could be considered as the end of the market crash.

My major point was and it's still is that the huge volume released during this stock market crash, especially in period from January 8 until January 25 2008 has set the strong support level. As I always mention - volume is 2-side transaction. If we have volume = 6 billion shares on January 23, 2008 that means that huge number of traders sold 6 billion shares in panic under the media pressure about the long-term recession.

The Question #1 that each trader has to ask: who bought these shares (that’s why we have volume)… Interesting… who could buy such huge amount of shares in the period of the world wide panic and in spite of all the bad news and in spite of all the talk about stock market crash…. Question # 2 that should be asked: What are those traders who sold in panic are going to do now?... They have cash, they do not have shares… Sooner or later they have to start investing again…. yet nobody selling any more in panic….

In the middle of the March 2008 we had second attempt to break the support level set in January. Some of the indexes break it (S&P 500 and NASDAQ 100) some do not (DJI). Again we had huge volume release during this time, again some 'mysterious traders' were buying while everybody were selling in panic under the media pressure about U.S. banking system crash….

Now we are up again…. Do you still trust media…. Where they were when the crash started in October 2008?…

Ok. Let’s go back to the market indicators. Let’s take a look at charts to see what they tell us.

If I look at 2-year chart I see very positive sentiment. The fact that the volume is down and VIX (volatility index) is down reveals that the market is going away from the panic selling. NASDAQ 100 has broke the February 4, 2008 high, yet the S&P 500 and DJI is still a few points below this level. Overall mid-term indicators look bullish by showing that there is a good potential of the further recovery development.

It was the big picture. If we take look at the shorter term charts and technical indicators we may not see such bullish picture. The last week recovery has brought the stock market in some overbought stage that may push the market into short-term correction (which could be healthy for recovery continuation). On the 60-day chart we may see oversold SBV(20) which moves down by indicating the possibility of the correction. Big MVO(5,25,3) on April 1–2, 2008 would point to the big volume surge during the price move up which may reverse the trend down. Advance decline indicators are moving down towards the negative territory by revealing the growing bearish sentiment. RSI and Stochastics are at the oversold levels and it looks like they have tendency to move down. MACD is moving down as well (negative sign). The indicators are bearish on all indexes including the NASDAQ 100, S&P 500 and DJI. That tells me that we have possibility of the move down over the next few trading session. Yet if the current move up is begging of the recovery from the market crush then we may face the situation when the expecting correction could be shallow or when the bearish indicators are ignored.

In few words, my technical analysis tells me mid-term up, yet short-term dowm.

SP 500