Don't Fight Papa Dow
That's how I learned it. You'll hear my friend Ralph Acampora say that all the time!
"You Never Want To Fight Papa Dow"
My interpretation is that there is wisdom in the Dow Components. If you want to know which way the market is headed, focus on those 30 stocks.
I'm not going to get into the discussion about whether the Dow is the best index or not. I've made my case before and stand by it today more than ever. If you have a problem with Dow Jones or Standard & Poors, stop complaining about it and just go build a better index. It's not that hard. We do it every day.
The Dow Jones Industrial Average, however, is a perfectly good index and gauge of stock market strength or weakness. One of the best parts is that there are only 30 components!
Hellooo??? Do you want to go through 500 stocks? Or 3000 in the case of the Russell3000?
Or just 30?
If all the charts of these indexes look pretty much exactly the same, doesn't an easy 30 stocks make the most sense?
At our firm we do all of the above, but for someone who does not do this professionally, I really like the idea of going through all 30 Dow components every week on both weekly and daily timeframes. It might take you 20 minutes, and that's if you really take your time with it.
Are more of them going up? Or are more of them going down? Are more of them breaking out of bases to new highs or completing tops and making new lows? These are the questions we want to be asking as we're going through these 60 charts (all 30 names on both time horizons).
Read: The Dow Jones Industrial Average is Underrated
Today I'd like to welcome 3 new stocks to the Dow family: Salesforce $CRM, Amgen $AMGN and welcome back Honeywell $HON, who left us a decade ago.
So what does this mean to us? Well at first glance, it means less energy and more tech. Needless to say, this would have been more helpful years ago....
Anyway, by our work, the Dow Jones Industrial Average is in an uptrend. Our bet is that this continues.
Here is what the addition of a new Tech stock looks like, especially when you kick out an Energy name:
Click on Charts to Zoom in
These additions have clear relative strength advantages to those getting booted (Exxon, Raytheon and Pfizer).
Now let's take a look at the charts of these new stocks. The first one is Salesforce.
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