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Dow Jones Makes a Fake New High Whilst most of its Component Stocks Don't !

Stock-Markets / US Stock Markets Oct 13, 2006 - 09:00 PM

As the Dow Jones posts new record highs this month, there is something strange going on with the Dow components where most of them are NOT making new highs !!!

So how many Dow Components are making NEW ALL TIME highs this month ?
FIVE ! That's 5 out of 30 are making new all time highs - WHILST the Index makes NEW highs

How many trading more than 10% below their all time highs ?
TWENTY - Two thirds of the Dow Stocks are trading more than 10% Below their all time highs.

How many are trading more than 20% below their all time highs ?
EIGHTEEN - More than half the Dow 30 Stocks are trading 20% Below their all time highs.

And here's a real shocker ! How many stocks are trading more than 50% ! Below their all time highs !
FIVE DOW STOCKS are trading more than 50% below their all time highs - THATS the same number making new all time highs !

So where am I going with this analysis ? ...... In the run up to the US Election the Dow Jones is Making NEW All time highs, when most of its components are nowhere near making new highs, does this or does this not smell of market manipulation ?

The situation is even worse when you consider the stocks that have been REMOVED from the index ! I.e. Eastman Kodak off 75%, International Paper off 45%. Those that say the markets are not manipulated, then who do you explain these facts ?

Table of ALL Dow 30 Stocks

Name	Last	Change	Percent	YTD Percent	Year High	All time high	% from High
ALCOA INC	26.64	0.04	0.15%	-9.91%	36.96	45	-41%
AMER INTL GROUP INC	67.27	-0.08	-0.12%	-1.41%	71.09	71.09	-5%
AMER EXPRESS INC	58.02	0.13	0.22%	12.75%	58.02	58.02	0%
BOEING CO	82.39	-1.25	-1.49%	17.30%	89.58	89.58	-8%
CITIGROUP INC	50.38	0.2	0.40%	3.81%	51.33	55	-8%
CATERPILLAR INC	69.08	-0.17	-0.25%	19.58%	82.03	82.03	-16%
DU PONT E I DE NEM	45.08	-0.04	-0.09%	6.07%	45.75	85	-47%
WALT DISNEY-DISNEY C	31.11	-0.19	-0.61%	29.79%	31.59	44	-29%
GEN ELECTRIC CO	35.98	-0.24	-0.66%	2.65%	36.48	61	-41%
GEN MOTORS	32.99	0.33	1.01%	69.88%	34	94	-65%
HOME DEPOT INC	36.9	-1	-2.64%	-8.84%	43.95	70	-47%
HONEYWELL INTL INC	42.61	0.3	0.71%	14.39%	44.48	68	-37%
HEWLETT PACKARD CO	38.86	0.44	1.15%	35.73%	39	69	-44%
INTL BUSINESS MACH	86.08	1.38	1.63%	4.72%	89.94	138	-38%
INTEL CP	21.6	0.11	0.51%	-13.46%	27.49	76	-72%
JOHNSON AND JOHNS DC	64.58	-0.26	-0.40%	7.45%	65.88	70	-8%
JP MORGAN CHASE CO	48.16	-0.1	-0.21%	21.34%	48.57	65	-26%
COCA COLA CO THE	44.02	-0.03	-0.07%	9.20%	45.4	88	-50%
MCDONALDS CP	42.11	-0.12	-0.28%	24.88%	42.46	50	-16%
3M COMPANY	75.4	-0.03	-0.04%	-2.71%	88.35	90	-16%
ALTRIA GROUP INC	79.63	0.85	1.08%	6.57%	85	85	-6%
MERCK CO INC	43.2	0.44	1.03%	35.81%	43.54	90	-52%
MICROSOFT CP	28.37	0.15	0.53%	8.49%	28.69	60	-53%
PFIZER INC	27.59	-0.06	-0.22%	18.31%	28.6	50	-45%
PROCTER GAMBLE CO	62.13	-0.28	-0.45%	7.34%	63.74	63.74	-3%
AT& T INC.	33.6	unch	unch%	37.20%	33.76	60	-44%
UNITED TECH	66.5	0.12	0.18%	18.94%	66.89	66.89	-1%
VERIZON COMMUN	37.05	0.06	0.16%	23.01%	38	68	-46%
WAL MART STORES	48.46	0.14	0.29%	3.55%	50.87	70	-31%
EXXON MOBIL CP	68.4	0.75	1.11%	21.77%	71.22	71.22	-4%

So How is the Dow being manipulated higher ?

The Buying of Dow Futures contracts by institutions such as the Fed and politically motivated financial instituions, wanting to manipulate the market, cash values of those stocks that are more susceptible to raising the index are bought via arbitrage programs that look for differences between the cash index and the futures market, thus most components (low priced dow stocks), don't factor into the arbitrage programs buying activity.

Why ?
Thats obvious, in the run up to the US Mid-term Elections in November. There could be a case of something similar with Crude oil, but thats a seperate article ;)

Nadeem Walayat

(c) MarketOracle.co.uk 2005-2006

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Comments

14 Oct 06, 21:36	Re: Dow Jones Makes a Fake New High Whilst most of its Component Stocks Don't ! So how high does the Dow have to go to make a new high in realterms?
Nadeem_Walayat 14 Oct 06, 21:39	Re: Dow Jones Makes a Fake New High Whilst most of its Component Stocks Don't ! In real-terms the dow would need to rise above 14,800 to make a new REAL high
30 Oct 06, 03:32	Re: Dow Jones Makes a Fake New High Whilst most of its Component Stocks Don't ! Yet this economic "resilience" on Wall Street isn't being felt on Main Street. The vast majority of the American working family is simply being squeezed by high energy costs, high or no healthcare costs an skyrocketing college tuition costs. This is NOT the economy we enjoyed in the 1990's - and it wasn't just the dot.com sector which benefitted. Latest Gallup poll shows over 2/3 (68%) of Americans think this country is headed in the wrong direction. Only 30% believe everything is OK. That has been a long term trend and has actually worsened over the past year. Sinclair...

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