Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
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rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
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is mandated by law. And I've identified the ONLY stock positioned to
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The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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| ETF
Spotlight -- Dow Diamonds (DIA) |
Published: January 5, 2004
The Dow Jones Industrial Average is the oldest and
most widely recognized stock market index. When people ask, "How
much is the stock market up or down today?", the answer will almost
always come back in terms of the Dow. The Dow Diamonds (DIA, $104.37) is
an exchange-traded fund that holds the 30 stocks that comprise the
venerable index.
The Dow Jones Industrial Average (DJIA) was created by the founder of
the Wall Street Journal, Charles Dow, in 1884. It initially
included just 12 stocks, but was ultimately increased to 30 stocks in
1928. Unlike the Nasdaq 100 and the S&P 500, the Dow is not changed
on a regular basis. The last major set of changes took place in November
1999 when Microsoft (MSFT, $27.45), Intel (INTC, $32.16), SBC
Communications (SBC, $26.14) and Home Depot (HD, $35.02) replaced
Chevron (CVX, $85.89), Goodyear Tire and Rubber (GT, $7.96), Sears (S,
$44.87) and Union Carbide (merged with Dow Chemical, which is not part
of the Dow). The inclusion of Intel and Microsoft was big news, as it
marked the first time in history that non-New York Stock Exchange (NYSE)
issues had been added to the index.
Unlike the Nasdaq Composite and S&P 500, which are
weighted according to the market value (capitalization) of the
underlying stocks, the Dow is price weighted. That is, the higher the
price of a stock, the greater its weight in the Dow. Proctor and Gamble
(PG, $98.99) is currently the highest priced DJIA component, and as
such, it accounts for more than 7% of the Dow's value.
| Dow
Diamonds (DIA) |
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| Type: |
Index |
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| Similar funds: |
S&P
500 SPDR (SPY) |
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Nasdaq-100
Trust (QQQ) |
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| Options?: |
Yes, liquid |
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| Performance
Data |
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| 52-week High: |
$104.75 |
12/29/2003 |
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Annualized
return since: |
| 52-week Low: |
$74.31 |
3/12/2003 |
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One-year |
27.29% |
| 2003 Return: |
27.29% |
As
of close 11/21/03 |
Three-year |
1.12% |
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Five-year |
4.43% |
| Dividends: |
$0.14 |
past 12-mos |
Life of fund* |
6.80% |
| Expense Ratio: |
0.18% |
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*
- Started trading 1/20/1998 |
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| Correlation
Data* |
(1/02/02-12/31/03) |
Holdings* |
(as of
11/30/2003) |
| Dow
Jones Industrials |
98.5% |
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Proctor & Gamble
(PG) |
7.28% |
| S&P 500 |
|
96.1% |
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Intl.
Bus. Machines (IBM) |
6.85% |
| Nasdaq
Composite |
84.5% |
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United
Technologies (UTX) |
6.48% |
| Nasdaq-100 |
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82.1% |
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3M
(MMM) |
5.98% |
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Caterpillar
Inc. (CAT) |
5.75% |
| SPY |
|
97.4% |
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Wal-Mart (WMT) |
4.21% |
| QQQ |
|
81.8% |
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Altria Group (MO) |
3.93% |
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Johnson&Johnson
(JNJ) |
3.73% |
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Citigroup (C) |
3.56% |
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Coca-Cola (KO) |
3.52% |
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*
Percent top ten are of total |
51.29% |
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| Average
Daily Volume |
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Average
Daily Price Range |
| Dec-03 |
6,297,114 |
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Dec-03 |
0.9% |
| 2003 |
7,210,506 |
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2003 |
1.5% |
| 2002 |
7,893,794 |
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2002 |
2.2% |
| *
- Correlation measures how closely the two items track each
other |
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*
Includes prior day's close (true range) |
HOW TO MAKE MONEY IN DIA THIS
YEAR
I have been looking for a top in the stock market for months. Prices, as
of the New Year, are finally near at least short-term targets. DIA has
already achieved the 1.618 Fibonacci extension of the initial rally from
the October 2002 low on January 2, 2004. The price was $105.41.
Note: Many people compute Fibonacci
extensions as the number of points, but when price moves are large, this
can be misleading. Consider a stock that moves from $10 to $20, then
corrects to $15. If we looked for an equal-sized rally after the
correction to $15, and used the point move of $10, our target would be
$25. Unfortunately, from $10 to $20 represented a 100% move in price,
while $15 to $25 would be just 60%. An equal-sized, in percentage terms,
100% rally would leave us with a target of $30.
As you can see from the chart, I have counted the rally off the lows as
A-B-C (based on Elliott Wave Theory, which I use heavily in my
analysis). However, the recent price action may force me to revise that
thinking. Momentum has confirmed the recent price gains (at least on a
weekly timeframe), which is the norm for a third wave and not usually a
C-wave. Prices have also reached the 1.618 Fibonacci extension, as noted
above, and the pattern does not yet look complete. Ultimate price
targets point to $106.16 to $109.24 before a correction or reversal
starts. If the fall is very powerful, then it could mean that the A-B-C
level is correct, and we could then expect DIA to fall to new lows.
Given the recent price gains and momentum, failure to collapse on any
reversal will have me change the count to a 1-2-3 and then look for new
highs later in 2004. Corrective targets though would point to
approximately an $8-$13 fall before the next major leg higher can begin.
Timing for a short-term top is anytime between now and the end of
January. Look for any correction to take at least two months to complete
with another larger rally due to start before Summer, if the bullish
count turns out to be correct. If we begin a move to new lows, then the
stock market is not likely to bottom before late 2005.
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