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Introduction to Dow Jones Industrial Average (DJIA)
DJIA Overview
The Dow Jones Industrial Average (DJIA) is a renowned and age-old stock market index, serving as a key indicator of the overall health of the U.S. stock market and economy.
Price-Weighted Index
DJIA is a price-weighted index, where companies with higher stock prices have a greater impact on the index’s performance.
Investment Strategy
The cycle/relative strength concept is applied for January 2024, with a focus on both expected returns and relative strength.
Investment Process
Ranking and Screening
- DJIA stocks are ranked by calculating expected returns for the month.
- Top performers are screened for relative strength based on a unique measure over different time periods.
Longs and Shorts
- Top 5 rated stocks are considered for long positions.
- Bottom 5 rated stocks are shorted.
Expected Market Rally
- Mid-month rally expected, favoring long positions.
Advantages and Disadvantages
Advantages of Dow Stocks
- Represents well-established, financially sound companies.
- Offers diversified exposure to the U.S. economy.
Disadvantages of DJIA
- Limited scope with only 30 companies.
- Price-weighting methodology may skew performance.
Dow Jones Stocks to Watch
1. Microsoft Corporation (MSFT)
Business Overview
- Multinational technology company.
- Known for software products and cloud computing services.
Recent News
- Declared a quarterly dividend of $0.75 per share.
- Annual dividend yield of 0.81%.
Stock Performance
- Last month: -0.96%.
- Current Trading: $370.62 per share.
2. Nike Inc. (NKE)
Business Overview
- Multinational corporation in athletic footwear and apparel.
Recent News
- Q2 2024 financial results beat estimates.
- Earnings of $1.03 per share, revenue of $13.39 billion.
Stock Performance
- Last month: -12.06%.
- Current Trading: $101.98 per share.
3. Apple Inc. (AAPL)
Business Overview
- Global technology leader in consumer electronics.
Recent News
- Q4 2023 financial results exceeded expectations.
- Earnings of $1.46 per share, revenue of $89.50 billion.
Stock Performance
- Last month: -6.23%.
- Current Trading: $183.46 per share.
Investment Considerations
- DJIA stocks offer stability and recognizable brands.
- Limited scope and price-weighting method should be considered for portfolio suitability.
January 2024 Outlook
- Top 5 long stocks have historically outperformed short sales.
- Investors should assess advantages and disadvantages before making investment decisions.
Sources
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