Late day selloff puts the DJIA well under 10k On newsaboutinsurance.com

Late day selloff puts the DJIA well under 10k

From AlphaNinja | 2010-02-08 20:00:07

A late day selloff wiped out the gains from Friday's late push upward. &nbsp;The DJIA is now comfortably below the&nbsp;emotional&nbsp;10,000 level. &nbsp;Everyone except for JPMorgan and GE were negative.

Below is the DJIA sorted in declining order of index weight. &nbsp;I've written before about the DJIA's ridiculous weighting methodology, but as insane as it is, it's also part of the reason I like&nbsp;owning&nbsp;the index (through the DIA index fund). &nbsp;

I was quoted at Minyanville near last winter's lows,&nbsp;pointing&nbsp;out how it was a positive that you could simply erase the bottom five stocks from&nbsp;the&nbsp;DJIA and it would cost just a scant couple percent:

If you look at the weights now, the bottom five account for 6.1% of the DJIA. &nbsp;Is that a negative? &nbsp;Not in my book. &nbsp;A year ago, I had no confidence that the&nbsp;common&nbsp;stock of any of the bottom 5 would survive. &nbsp;That turned out overly pessimistic, as only GM is gone. &nbsp;(Well, SHOULD be gone - the doomed remnant of GM still trades among crazies willing to lose money on a sure&nbsp;wipe-out). &nbsp; A look at the bottom five now shows for the most part MUCH healthier companies. &nbsp;

-- &nbsp;Intel at 1.5% is a&nbsp;tragedy, I wish the stock comprised a far higher portion of the index.
-- &nbsp;Pfizer at 1.4% is unloved, trading at a PE of less than 8 on concerns about patent expirations.
-- &nbsp;GE and BofA combine for 2.3% of the DJIA. &nbsp;I have no faith in their balance sheets, and have no clue where they're headed, though the current (steep) yield curve is great for BofA.
-- &nbsp;Alcoa engaged in SYA (Save Your Ass) financing last year, yet it saved the&nbsp;equity-holders&nbsp;in the long run...&nbsp;

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