Dow charts and what they suggest.

I have put together 1 year charts of some of the Dow 30 stocks below and the overall chart of the Dow Industrial average for a comparison. We are at a very critical juncture in the market right now as we have extended the rally now to what appears to be a peak, after having weathered a recent drop in March. The question on everyones mind is whether this means we are going to go higher on our way to 14,000, stay in a tight range or tip over. For some clues, looking at where individual stocks of the Dow are currently, might help us. A number of the stocks that make up the Dow, clearly show they have been leaders over the past year. Leading the gains in the composite Dow over the past year include CAT, DIS and HD. None of the other stocks gained as much from a percentage point of view. Here's a summary of the gains by stocks from the lows around May/June of last year to Friday's close in descending order of percent gains.

CAT 100%
AA 80%
DD 72%
CVX 69%
XOM 55%
GE 54%
PFE 50%
VZ 50%
HD 46%
KO 43%
T 38%
IBM 38%
DIS 38%
UTX 37%
JPM 34%
MMM 31%
TRV 30%
BA 29%
AXP 21%
MFST 19%
MCD 19%
KFT 18%
WMT 13%
MRK 10%
JNU 7%
PG 0%
INTC 0%
HPQ -6%
BAC -13%
CSCO -26%

THE OVERALL DOW JONES INDUSTRIAL AVERAGE HAD A GAIN OF 28% FOR THE SAME PERIOD.

Now, to get a sense of market direction in the coming weeks I decided to focus on the leaders to see what has happened in the past 3-5 days looking for weakness. CAT for example has turned down. AA has paused, as their earnings are to be the first released this week as earnings season begins. DO has also paused. CVX seems to continue to gain as OIL has gone over $110/barrel, so it's continued move up does have a context. The same is true for XOM, it's the price of oil. GE has turned down the past few days. So I have concluded that if Oil prices had not surged, this market would be dropping. Given that premise, oil prices shouldn't surge much from here, unless there are new problems in the Middle East besides Libya, say in Saudi Arabia.

I know the news of avoiding a shutdown of government is a good thing but I don't see much of a rally from it next week. If there is any rally, it should come from Earnings reports. I'm expecting the rally to stall and flounder. Other experts believe a rally is in order. This is definitely a real possibility but at the end of this last push higher is the precipice where stocks will drop sharply as the big scary decline begins. Below are a few of the charts for individual stocks in the Dow and the Dow itself.

Market comments for Nov. 23rd

Well we did go below 11.000 on the Dow this morning, as the Put to Call ratio had suggested it would on last Friday, but it quickly went back above it. It took a barrage of blasts by North Korea into South Korea to drive all world markets lower, but whatever the event, the markets will be under pressure for at least another 40 days. The Nasdaq has also gone below the psychological 2500 level and currently is around 2489, down 42 points today. The S&P 500 is also down to the 1180 level. Tax related selling is full in force right now as well. Insider trading this morning shows an imbalance of Insider Selling dollars versus Insider Buying. One company to note is TRW and 5 Insiders have sold $490 million dollars of stock this morning. Home Depot (HD) had 3 Insiders who sold $173 million dollars of its stock and Cinemark (CNK) had one Insider sell $177 Million of its stock this morning. Contrast this to 3 Insiders buying AIG stock for a total of $45 million (this could be a fed easing investment) and Live Nation (LYV) had one Insider Buying $45 million in its stock.

Market Update: Friday June 19th (UPDATE)

Pre-market indicators are up today. European markets are also up at this time and Asian markets were also up in overnight trading. Today is Options Expiration for Equities for the month of June and this month Quadruple Witching. All indications from pre-market are that we should finish up today, but the volume did not convince me yesterday, as trading will be most dramatic in the last half hour, so anything can happen. Don't bet on a higher finish.

The chart above is from Chart of the Day looking at the Dow from 1925 to now, inflation adjusted, except that I have added a red line with an arrow which shows where there is resistance. That line crosses at about 7,500 on the Dow. However if you look at the lows from history, the Dow fears are that it could go as low as 4,000 according to chartists. That was the fear when we hit the low of 6,440 on the Dow. many worried if we didn't low we were going as low as 4,000. But we did hold and managed to rally 40% from there.

I don't want to be a broken record as to repeating where the market will go before the end of October, as you all know my views. If you don't just read some of my recent posts this month.

I wanted to add several points this morning. I told a friend a few days ago to sell Home Depot (HD) as I see it going lower, and buy instead Lowes (L). I suggest any holding Home Depot do likewise. I also have asked a number of businesses in my local community in Marin County how business is and they said awful. In a local Mall yesterday where there were several hundred people, they seemed to be there to relax and eat some lunch in a few local restaurants but I noticed only 3 people carrying any packages from shopping. I also noticed a number of stores with huge Sales trying to attract customers, but there were few buyers or shoppers in their stores. Marin County is one of the wealthiest counties in California and the nation. Retail Space is very available as I see many For Lease signs. It does not look good for the economy here so I can't imagine how it is good for other not so wealthy communities.

The Put to Call ratio closed at 0.95 yesterday, down from the previous 2 days. Volume was less for the Dow and the Nasdaq and not convincing of the move up. The Dow remains below its 200 day Moving average.

UPDATE: 9:45am

The Dow was up about 60 points earlier this morning. However the Dow is now negative at down 15 points. Volume is high and already at the Moving average and will significantly exceed today. The Nasdaq is also ahead in volume today but it is still positive for the day. The S&P 500 is barely positive right now, up 1 point.