Today the highly popular Dow Jones Industrial Average (DJIA) is under some pressure. This stock index has lead the stock markets higher since mid-January. The NASDAQ Composite, S&P 500 Index, and the Russell 2000 Index have all lagged the DJIA since that time.
It is important for traders and investors to note that the DJIA consists of just 30 stocks that are price cap weighted. The other leading stock market indexes are all market cap weighted. Therefore, if the DJIA has a very high priced stock doing well on a particular trading session it can hold the entire DJIA up or keep it from declining very much on the trading day.
The big winner in the DJIA today is Disney Co. (NYSE:DIS). Today Disney is now a $43.00 stock trading higher by $1.97 on the session. However, Stocks such as International Business Machines Corp. (NYSE:IBM), Exxon Mobil Corp. (NYSE:XOM), and Chevron Corp. (NYSE:CVX), are all trading sharply lower today. These stock are priced much higher than Disney Co. and this is putting pressure on the DJIA. Always be careful when you follow the DJIA as it does not always tell the true story of the markets.