Dissecting the Dow for General Market Direction: MCD, MMM, MRK, MSFT and NKE

February 5th, 2014

by Steven Bauer

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After review of all the Dow 30 component Companies these five Companies are amongst those that contribute to the suggestion that the very old Bull General Market is deteriorating meaningfully. It is always a slow process of topping a multi-year bull market. It therefore requires much patience and discipline. Doing your homework / analytics each day over the years helps more than you might think.

Of the 30 component Companies in the Dow Industrials, currently 6 are Losers and 24 remain Bullish. For reference, just six months ago there was only one Loser. The “Losers” are increasing and those currently Bullish Companies are looking very questionable. My Forecasts suggest….

Forecasting the General Market for me is fun. I use my Cycle Analysis and Forecasting Methodology along with the 30 Dow Industrial Component Companies and their respective Industry Groups. I use the same procedures with several broader based indices for verification and comparative analytics. With a brief narrative and rather simple graphics / charts, I will attempt to share how I go about getting consistently positive results.

My most current monthly composite article with a table for all 30 of the Dow Companies can be read here.

Fundamental Valuation is foundational to all securities research and it, like the Marketplace itself has changed notably. What used to be a very mechanical mathematical process is now not just a science, it is also an art requiring much right-brain talent.

Cycle Analysis for me means identifying Bullish and Bearish Primary and Secondary Inflection Points for the General Market, Sectors, Industry Groups, Commodities, Companies and ETFs. Yes, it can be done and this series articles will share how I go about the task. My specific articles and graphics on Cycles may be of interest.

Forecasting is a tool that I use primarily because it offers me what I call "lead time." That means, I have time to "Cherry Pick" the Best of the Best for Bullish Cycles and the Worst of the Worst for Bearish Cycles.

I have chosen the Dow 30 Industrial Companies to share with you my expertise with all securities, because it is the easiest job you can give to a financial analyst. That is because there is an over-abundance of accurate information and data available for each Company. In today's world, the Dow 30 has more words published each day than a person can possibly absorb. One comment about the above "accurate information" remark: One of the biggest problems in the Marketplace today (and getting worse) is the false and misleading information disseminated by many companies, Wall Street, the financial media and a few peer bloggers.

The Dow 30 represents about 33% of the total market-cap of the world's universe of companies. At present, the NYSE has about 3,200 listed companies to choose from. And, the Nasdaq sports about 6,000 companies. My Universe of ETFs is over 250 strong covering most all Indices, Sectors and Industry Groups.

The five Dow components I will forecast in this article are listed in the table below. I hope in conjunction with the supporting graphics / charts you will quickly come to understand how I go about using my Fundamental Valuation and Technical Analysis procedures to do my Cycle Analysis and Forecasting and hence, provide my clients with ongoing and timely guidance and direction.

My Unique Dow Chart w/ Commodities and My I. P. Counts

This Graphic / Chart is updated every Saturday morning. Check it out.

Percent Chart for Perspective

Combining my Fundamental – Valuations with my very unique Technical Analysis always provides a clear perspective of the Best of the Best for Bullish Cycles and the Worst of the Worst for Bearish Cycles.

How come four of these companies are up 30% to 50% and McDonalds is flat. There are clear calculable reasons that tell that story well ahead of taking positions.

Market Status with a Dow 30 Industrials Focus

The Dow 30 Industrials is an excellent bellwether of the direction of the General Market. I hope you will find through my flow of articles, as I have over many years, that my use of these 30 Companies tells us all the direction of the Marketplace – very, very well. It just takes a lot of work.

In my opinion, the fundamentals are over-valued, the technicals are over-bought, and the consensus opinion is way too bullish. Economic and financial news, on balance, is negative and not supportive of taking any Bullish positions. There are, of course, exceptions.

I am currently turning Bearish because my Fundamental Valuations have been deteriorating for quite some time, and my Technical Indicators are breaking down weekly. It's just that simple!

Supporting Articles for this Week's Five Companies

Here are links to my article archives for this week's focus group: MCD, MMM, MRK, MSFT, NKE .

Table of the Five Dow 30 Component Companies

A Twenty Year Chart Offers a Perspective That Always Gives You Greater Profits

It has NOT always been like you are being told by so many who do not take the time to do their homework and "Invest Wisely." Every Dow 30 Component Company has taken some big hits over the years.

Here are links to my 20-year charts for each of the five Companies: MCD, MMM, MRK, MSFT, NKE .

Summary

At this writing dissecting these five Companies are suggesting that the very old Bull General Market is deteriorating. It is always a slow process of topping that requires much patience and discipline. Doing your homework each day helps more than you might think.

Of the 30 component Companies in the Dow Industrials, currently 6 are Losers and 24 remain Bullish. For reference, just six months ago there was only one Loser. My Forecasts suggest that within the next six months a notable number, not all, of the current 24 Bullish Dow components will become Losers. It is simple mathematics with a few caveats: When there are more bullish companies you have a bull market, and vice-versa. The trick is knowing the Bulls from the Bears! As this occurs, the Dow Industrial Index will be taking hits or pull-backs that will clearly confirm to you that a Bear Market is in the making.

My work with the Dow 30 Industrials is by far the most graphic of all my Analytic (Indices and Other Key) Indicators. Sharing it with the Public is a pleasure and I indeed hope you will profit by my work.

Smile, Have fun, "Investing Wisely,"

Dr. Steve

Note : For a daily input and deeper view of my work / analytics you might want to click, and scroll down to my "Thumb-Nail" articles on my personal blog, which I update daily.

To Email Me with your questions or thoughts: senorstevedrmx@yahoo.com.

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