Wednesday, March 26, 2014

More on the Dow Consumer Average:

I focus on the Dow Consumer (sorry Industrial) average because unlike the “hot” 1980’s the Dow Industrials should have a name change – to the Dow Consumer Average – because unlike the 1980’s when there were 18 industrial components – now there are only 6 industrial components. The number of consumer related components has jumped from 6 in 1982 to 12 in 2014 – add-on the current financial (4) and health care (4) and you have an over-priced basket of consumer weighted interest sensitive stocks.

Pile on the growing number of high profile names printing a swing failure which is alarming – some examples AMZN, GOOG, DDD, GM, NFLX, PCLN, TSLA, YHOO and V plus several other Dow components all suggesting a pending correction in the broader US stock indices. A swing failure occurs when – following an uptrend the stock or index corrects and the subsequent advance fails to exceed the prior price peak. The chart displays the Goldman (GS) and Nike (NKE) swing failures – two of many.

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