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Dow Jones 2015 Report

Dow Jones Report & TCI Trading Signal

Asset: Dow Jones Industrial (DJIA)

Period: September-October 2015

TCI Forecast: DJIA to complete its uptrend in September (↑) starting a new bear market in early October (↓)

Dow Jones has moved considerably lower since July 2015, from 18.137 points in July, 20th now it is trading at 16.102 points. There are quite a few reasons that could explain why the investor’s sentiment has changed from bullish to bearish so rapidly. Nevertheless, what seems to drive the market at this point isn’t hard fundamental data but a fragile investor’s psychology. The US Equity Markets are rising 7 years in a row now, since 2009, and maybe it’s time for a strong correction that will make valuations cheap again.

Is Dow Jones an expensive market today in terms of earnings? Let’s find out how the P/Es and Dividends (%) of the US Markets are formed after the August slump.

Dow Jones, S&P 500 and Nasdaq Earnings Report

These are the P/Es and Dividend Yields of the major US Equity Indices as concerns the valuations of September, 4th 2015.

P/E RATIO

DIVIDEND YIELD

 

Today

One year ago

Today

One year ago

Dow Industrial

15.41

16.18

2.66%

2.20% 

Dow Transportation

17.55

20.58

1.45%

1.10% 

S&P 500

20.35

18.97

2.18%

1.91% 

Nasdaq 100

21.35

23.55

1.29%

1.26% 

+Today: September, 4th 2015

Source: WSJ Market Data Group

The P/Es of the US Equity Markets are cheaper than they were one year ago and should not be considered as expensive. Nevertheless we have seen in the past P/Es 20-25% cheaper than today’s readings. Given the fragile market psychology the current P/E ratios of the US Markets could become considerably cheaper. The good news for investors is that according to historic market analysis, the numerical relationship between stock market valuations and P/Es returns always in the level of historic averages. Therefore if the earnings of US companies remain strong in the long-run the prices of US stocks will become bullish again after a few months.

The Economic Turmoil in China

China is rapidly transforming itself into a Western-Type economy by shifting from manufacturing to services. This transformation can’t come without a cost. As the Chinese manufacturing data is dropping the impact on the Chinese stock-market is purely negative. That situation reverberated in every emerging equity market in the world and damaged furthermore both investor’s sentiment and the price of Crude Oil. Nevertheless the Chinese government is more than willing to stimulate the economy and the stock-market. According to Reuters, Chinese officials stated on Monday that personal income tax on dividends for shareholders will be removed for those who hold their stocks for more than a year. Maybe the worst for China isn’t over yet but in any case the resources of this Asian giant are so great that any financial or other economic crisis will not last more than 6-8 months.

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Dow Jones Technical Analysis and TCI Readings

As you may see in the chart below Dow Jones Industrial has performed amazingly for the past five years. After the ‘bloody’ August Dow Jones now trades considerably lower than its 210-days SMA (Simple Moving Average). In the upper chart the Dow Jones Industrial (DJIA) daily line chart and in the lower chart the Trading Center Indicator (TCI) on Dow Jones.

Dow Jones Industrial and TCI on Dow

TCI on Dow Jones

In the 25th of August 2015 TCI on Dow Jones Industrial indicated -15.69% (check TCI table below) which is a considerably low reading for a major Equity Index such is DJIA. As you can see in the Dow Chart above, the reading -15.69% is the second lowest reading of the past five years. The lowest TCI reading of the past five years occurred in the 8th of August 2011, when TCI indicated -17.31%. In the case of 2011 Dow reacted from 10.810 points in August to 12.303 points in late October 2011.

In the case of 2015, TCI suggest that Dow Jones could have 2-3 positive weeks in order to complete its current correctional rally.

Here are TCI Indications regarding Dow Jones Industrial for September-October 2015 (press slider below).

Table: TCI on Dow Jones (DJIA)

Date

Close

High

Low

Volume (in thousands)

Price Change

Volatility

TCI

19-Aug-15

17,349

17,517

17,282

$104,720,000

-0.93%

1.4%

-0.66%

20-Aug-15

16,991

17,345

16,991

$128,530,000

-2.06%

2.1%

-3.66%

21-Aug-15

16,460

16,991

16,460

$225,170,000

-3.12%

3.2%

-8.61%

24-Aug-15

15,871

16,460

15,370

$293,920,000

-3.57%

7.1%

-12.97%

25-Aug-15

15,666

16,313

15,651

$213,220,000

-1.29%

4.2%

-15.69%

26-Aug-15

16,286

16,304

15,676

$208,420,000

3.95%

4.0%

-9.70%

27-Aug-15

16,655

16,667

16,286

$171,980,000

2.27%

2.3%

-6.36%

28-Aug-15

16,643

16,670

16,535

$131,790,000

-0.07%

0.8%

-5.18%

31-Aug-15

16,528

16,632

16,444

$141,440,000

-0.69%

1.1%

-5.22%

1-Sep-15

16,058

16,528

15,980

$171,390,000

-2.84%

3.4%

-8.17%

2-Sep-15

16,351

16,353

16,058

$133,480,000

1.82%

1.8%

-5.93%

3-Sep-15

16,375

16,550

16,317

$109,730,000

0.14%

1.4%

-6.07%

4-Sep-15

16,102

16,341

16,004

$159,470,000

-1.66%

2.1%

-7.17%

(+1 Trading Days)

 

 

 

 

   

-7.01%

(+2 Trading Days)

 

 

 

 

   

-7.01%

(+3 Trading Days)

 

 

 

 

   

-6.84%

(+4 Trading Days)

 

 

 

 

   

-6.52%

(+5 Trading Days)

 

 

 

 

   

-5.16%

(+6 Trading Days)

 

 

 

 

   

-6.08%

(+7 Trading Days)

 

 

 

 

   

-6.56%

(+8 Trading Days)

 

 

 

 

   

-6.27%

(+9 Trading Days)

 

 

 

 

   

-5.59%

(+10 Trading Days)

 

 

 

 

   

-4.37%

(+11 Trading Days)

 

 

 

 

   

-4.43%

(+12 Trading Days)

 

 

 

 

   

-3.05%

(+13 Trading Days)

 

 

 

 

   

-2.34%

(+14 Trading Days)

 

 

 

 

   

-3.56%

(+15 Trading Days)

 

 

 

 

   

-4.47%

(+16 Trading Days)

 

 

 

 

   

-4.83%

(+17 Trading Days)

 

 

 

 

   

-4.57%

(+18 Trading Days)

 

 

 

 

   

-3.31%

(+19 Trading Days)

 

 

 

 

   

-2.83%

(+20 Trading Days)

 

 

 

 

   

-1.18%

(+21 Trading Days)

 

 

 

 

   

0.57%

(+22 Trading Days)

 

 

 

 

   

1.68%

 

 

 

 

 

   

-0.29%

 

 

 

 

 

   

-1.43%

 

 

 

 

 

   

-1.49%

Dow Jones Report (Macroeconomic Updates)

These are some recent macroeconomic updates regarding the US economy that have a strong impact on Dow Jones and the other US indices:

Table: Dow Jones Report (News & Events)

NEWS RELEASE

IMPACT

PREVIOUS

EXPECTED

ACTUAL

 Nonfarm Productivity

MEDIUM

1.30%

 

3.30%

 Factory Orders (MoM)

MEDIUM

1.80%

0.90%

0.40%

 EIA Crude Oil Stocks change

MEDIUM

-5.45M

0.03M

4.67M

 Trade Balance

HIGH

-$43.84B

-$42.40B

-$41.86B

 Initial Jobless Claims

HIGH

271.00K

275.00K

282.00K

 Markit PMI Composite

MEDIUM

55

 

55.7

 Markit Services PMI

MEDIUM

55.2

 

56.1

 ISM Non-Manufacturing PMI

HIGH

60.3

58.1

59

 EIA Natural Gas Storage change

LOW

69.00B

88.00B

94.00B

 Average Hourly Earnings (YoY)

MEDIUM

2.10%

 

2.20%

 Labor Force Participation Rate

MEDIUM

62.60%

 

62.60%

 Average Weekly Hours

HIGH

34.6

34.5

34.6

 Nonfarm Payrolls

HIGH

215.00K

220.00K

173.00K

 Unemployment Rate

HIGH

5.30%

5.20%

5.10%

New Release Source: MyFxBook

Dow Jones Report Last Words

In overall Dow Jones Industrial is expected to react positively from its current levels of 16.100 points and maybe to form a short-term uptrend but be aware that the next few months will probably prove tough for the global equity markets and I suggest keeping cash 50% of your total portfolio value. Keeping cash today means being able tomorrow to exploit good investing opportunities.

 

Dow Jones Report (Dow Jones Industrial 2015)

TradingCenter (2015) 

George M. Protonotarios, Financial Analyst, » George at Linkedin

 

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