MDA - Market Direction Analysis Message Board

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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 675.02

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Nov 25 4:00 PM EST

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To: HairBall who wrote (12943)	5/5/1999 2:31:00 PM
From: HairBall	Read Replies (2) of 99985

To All: I have seen a post or two as of late regarding the effect of the lower capitalized Dow Industrials issues moving the Index as much as the higher capitalized issues. And, one post in particular that stated that those lower capitalized issues were now moving the Index the same as the larger capitalized issues. This was wrong, each dollar move per issue does not move the Index the same. I would like to clear up how the Dow Industrials Index is weighted. It is "NOT" capitalization weighted. It "IS" price weighted per share. This weighting is an on going process. So, stocks with a higher price per share effect the Index more than a stock with a lower price per share. Market capitalization plays no part in the weighting process. (IE: In other words, smaller cap companies with a higher price per share can have a greater impact on the Index than would a larger cap company with a smaller price per share. The weighting changes intraday due to price fluctuations. To see the present market weight of the Dow 30 Industrials go to: dowjones.com Then click on "DJIA Stocks". Regards, LG

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