Tag Archives: DJIA

Dow Jones Industrial Average (DJIA)

History: The Dow Jones Industrial Average (DJIA) is the world’s most well-known stock market index, and it represents the global equity market mood and global economic conditions. It started on May 26, 1896 comprising 12 stocks. The Dow Jones Industrial Average was created by Dow Jones & Company co-founder and Wall Street Journal editor Charles Dow. The index was created to measure the performance of the industrial sector of the American stock market. Dow first created the Dow Jones Transportation Average & then after created the Dow Jones Industrial Average. The Dow Jones Industrial Average consists of 30 stocks. The price-weighted average of the 30 stocks determines the index value.

The index is currently a scaled average & not the actual average of the prices of its component stocks. To compensate for the effects of stock splits and other adjustments,β€”the sum of the component prices is divided by a divisor, which changes whenever one of the component stocks has a stock split or stock dividend, to generate the value of the index. Since the divisor is currently less than one, the value of the index is higher than the sum of the component prices. Continue reading Dow Jones Industrial Average (DJIA)

S&P 500 Index Forecast for 2012

Note to Investors: The few cheerful days of December seem to have erased the pain of November. December has historically been a positive month, and maybe this year 2011 sticks to the trend. However, there are no guarantees for 2012. If the S&P 500 index goes down from here, due to various negative news in the new year 2012 from within the USA and from the global economy, then the major supports are at the following levels: 1110 and 1000. Investors can buy at these levels, and sell with 10-15% gain on recovery rallies.

Below 1000 level, the only trade will be on the short side. Investors also should wait for S&P to come above 1000 before making major investments. Below 1000, there is 50% probability of retesting 666 — the low made on March 06, 2011.

If things become positive globally by end of 2012 (looks unlikely, but still possible) — with EU solving their problems in a neat way, the US fiscal deficit reducing along with reducing unemployment in USA and Europe, investors exiting gold and moving into real estate, etc — then S&P 500 can move up to our upside target of 1666.

There is something special about 666. It appears in both the downside and upside targets! It will be very difficult to pick the sectors that will take the lead. Therefore, consider using the S&P500 Index ETF (symbol: SPY) to move through the volatile times ahead in 2012.