There used to be a concept of a 'solitary walk of the Dow', where the Dow 30 (INDU) would be in a stand out bull move; the other indexes not so much. Now the same leader role can be seen with the soaring big cap Nasdaq 100 (NDX), with Apple (AAPL) leading NDX. However, AAPL can only pull INDU a bit as Apple is just another stock price
into the Dow. That's the funny ol Dow, NOT capitalization
-weighted like the other major indexes.
(1) MAILBAG QUESTION:
"... you don't put much faith in the dow as one to pay the most attention to. you wrote that many dow stocks are lagging tech and the s&p, so why hold that up as a bearish indicator? "
The Dow 30 (INDU) results for a given weekday isn't what I would lead the nightly news with but INDU is important. It's important because the investing public THINK it's important.
That's a lesser consideration for me. If the Dow is lagging substantially, the overall Market is not going to just keep advancing without the big name 30 stocks in INDU. We could say that the Dow could be the canary in the coal mine if it's lagging and the other indices keep advancing.
Apple (AAPL) is the stand out name in tech and its now what, the largest cap company in the S&P and the Nasdaq, which because these indices are capitalization-weighted, account for a more significant part of the recent move equaling its prior high in the S&P 500 (SPX) and powering Nasdaq to substantial new highs in the Nas Composite (COMP) and big cap Nas 100.
In the Dow Average, which is PRICE-weighted, AAPL is just another 100+ dollar stock as is Nike, Traveler's, Chevron, Boeing, etc. Because INDU is just 30 stocks and I can easily put 6 of the 30 on one chart 'window' and go through 5 such windows, on a weekly chart basis I can assess the 30 as to a snap judgment as to bullish, bearish or neutral/mixed. This gives me a bottoms up means of evaluating the overall market based on the actual trends of ALL of the stocks in at least one of the major indices. If I have time I'll show the 30 charts in 5 screen shots.
THE DOW DAILY CHART:
INDU is lagging SPX and the Average is still well under its prior peak, whereas at least the S&P 500 has re-tested its prior high and the Nasdaq indices have gone to decisive new highs.
WHY the lag in the Dow? Simply because SO MANY of the 30 stocks are in corrective pullbacks. I'll show the Dow charts in mini versions further on. First I want to compare the Dow to SPX, COMP and NDX. Are they looking increasingly bullish or 'tired' and in need of a rest so to speak.
Anyhow, the Dow not only needs to break out above its down trendline but has to go on to challenge its prior Closing high IF it is going to 'confirm' the overall Market in a new up leg.
THE S&P 500 DAILY CHART:
SPX broke the 'plane' of its advancing up trendline and this rising trendline now has been 'acting as' resistance per my chart highlights. SPX is not showing an overbought RSI 'extreme' or an extreme in bullish sentiment but the pattern looks like there could be a possible double top. Stay tuned on that!
SPX WEEKLY CHART:
As I've been pointing in various commentaries, SPX on a weekly chart basis continues to be, more or less, in a sideways trading range. Moreover, the Index has been going sideways on declining 'relative strength' per the 13-week Relative Strength Index (RSI) indicator. This can, not necessarily must, be forecasting a corrective pullback ahead. Or, SPX breaks out to the upside and rallies next to the 2200 area. But, then there's the problem of the lagging Dow. Will there be a catalyst to cause many of the bearish Dow stock patterns to reverse higher?
THE NASDAQ COMPOSITE WEEKLY CHART:
IF we are counting on or figuring that Nasdaq is going to continue to power the overall market higher, COMP doesn't have a bullish pattern to fall back on. The Index is finally AT resistance implied by the upper end of its broad uptrend price channel per the highlights below. Moreover, the most recent advance has occurred on a 13-week RSI that is trending lower. This is not a pattern to suggest full speed ahead and to good Bullish cheer!
THE NASDAQ 100 DAILY CHART:
If the broad Nasdaq Composite is the one that is in the daily news summary, the real power to it is the big cap Nas 100. As a capitalization-weighted index, AAPL's strong advance on strong earnings means that the stock weighs heavily in NDX's strong recent upswing.
The 'problem' so to speak with this advance continuing is that NDX is pretty far 'extended' in terms of how far the Index is ABOVE (+3.5%) its 21-day moving average. NDX has reached an area where it tends to see corrective pullbacks although this is not always immediate and of course isn't always the case.
Trading the Market is a game of probabilities. IF the probability of a further NDX gain, such as to 4600 or above is low, relative to the probability of a dip, such as to 4400, then a further bullish bet on the upside isn't a great prospect.
NDX WEEKLY CHART:
Just to amplify the 'extended' nature of the daily chart picture in NDX, the weekly chart is showing the potentially bearish 'pullback' prospect that was seen in the COMP weekly chart above.
THE 30 WEEKLY DOW CHARTS GROUPED IN 5 CHART 'WINDOWS'
You may start off noticing that, since I have the 30 INDU stock symbols arranged in alphabetical order from left to right on top and below, then AAPL should be in my first window of the first 6 weekly Dow charts seen next. Not so, for the simple reason that I put AAPL where AT&T (T) was previously. Sheer laziness as I didn't want to spend the time to shift all the chart windows to put AAPL in the proper alphabetical order.
The key points I want to make are quick analysis of the individual Dow weekly chart patterns ranging from bullish, to bearish corrections (of prior bull trends), to bearish longer range patterns, perhaps with upside retracements but with little to limited prospects of a major trend turnaround.
Keep in mind of course that today's Close (Tuesday, 4/28/15) is showing as the Friday end of week Close which is the convention for how weekly charts are displayed. THE WEEK ISN'T OVER so stay tuned on any analysis made with the week just 2 days old.
FROM AXP TO DD:
Remember that LOWER priced stocks (<100) that are rallying or rebounding will not push the Dow as high as HIGHER prices stocks (>100) will.
AXP is in bearish pattern; rebound possibly but limited.
BA is at risk of falling below its recent sideways consolidation.
CAT had been in a downside correction, now rebounding; mixed.
CSCO could be forming a top; mixed pattern.
CVX is bearish but rebounding; upside looks limited.
DD is rebounding after an apparent top; limited upside?
3 bearish, 1 bullish, 2 mixed.
FROM DIS TO INTC:
DIS is bullish.
GE difficulty breaking out to new up leg; mixed.
GS is bullish in its pattern.
HD could finally have made a interim top.
IBM continues to retrace break but upside probably limited.
INTC could be building a top; possible H&S top pattern.
2 bearish; 2 bullish; 2 mixed
FROM JNJ TO MRK:
JNJ sideways; mixed at prospects above/below 100.
JPM bullish above 62-63.
KO sideways; mixed.
MCD sideways; mixed.
MMM bearish; looks to have built a top.
MRK is mixed; limited upside.
1 bearish, 1 bullish, 4 mixed.
FROM MSFT TO TRV, INCLUDING AAPL IN THIS MIX:
MSFT; bullish rebound; could break out to new highs.
NKE bullish but may be building a top.
PFE may be topping; mixed to bearish.
PG has bearish chart.
AAPL is bullish but may have hit interim top.
TRV looks bearish in tracing out a possible rounding top.
3 bearish, 2 bullish, 1 mixed.
FROM UNH TO XOM:
UNH is bullish; beware of possible top.
UTX bearish; appears to have formed top.
V is bullish but tracing out sideways move.
VZ is mixed; possible limited upside.
WMT is bearish in its pattern.
XOM is bearish.
3 bearish, 2 bullish, 1 mixed.
MY DOW CHARTS 'SNAP' SUMMARY FOR GAUGING INDU TREND POTENTIAL:
I count 12 bearish Dow charts, even if there's some potential for some upside rebound or further upside retracement.
I count 8 bullish Dow charts, even if there's risk of a corrective pullback or sideways drift.
I count 10 mixed charts and don't then count them as EITHER adding to bullish upside potential OR adding to downside pressures.
IF there are more bearish charts than bullish, upside prospects for INDU look limited to me at a minimum or bearish on balance which is the case currently.
GOOD TRADING SUCCESS!