DOW JONES: Fundamental Analysis

During February and March, we have received the last balance sheets of the DOW JONES components. Using the statistics of Yahoo Finance and the information available in my broker, I made some relationships and comparisons between them. In addition, I compare the situation now and some periods ago. 

First, lets take a look to the Current Price / Book value relationship.  I am wondering why BA is so high, and the implications. AA, BAC, CVX, GE, DIS, JPM, KFT, T and TRV have good ratios.

Now, here we compare the beta of each stock. Notice that sectors like energy (XOM & CVX), consumer goods (KO, KFT, PG), Services (MCD & WMT), telecomunications (VZ & T) and drugs manufactures (PFE, MRK & JNJ) have the lowest. This are the "defensives" companies. 

Now that we have some idea about how this companies could react to the crisis, let's take a look on how they reacted until now. 

First, the revenues and the E.P.S.: MRK, T, PFE, MCD, PG, T, VZ and WMT were little affected. 

The E.P.S. growth vs. dividend growth (annual rate, from January 2007 to December 2009). It is interesting to notice the growth in the EPS of MRK, but this growth is not in relationship with the growth in dividend. Then, I would consider that an increase of dividends in MRK is something possible. MCD, PG, PFE and KFT are some companies in the same situation as MRK.

Revenue year over year (2009 vs 2008) and quarter over quarter (DEC/2009 vs SEP/2009). Notice that revenues from BA, HPQ, JNJ,, MCD, MRK, TRV, PFE, T and VZ were not affected.

Average annual  revenue, income and E.P.S. (2007 = 100%). I add up the revenue, income and E.P.S. of the 30 companies and divided by 30, to obtain an idea of this key numbers and their evolution during 2008 and 2009:

Average quarter revenue, income and E.P.S. (June 2009 = 100%):

DOW JONES: The bear case

This rising wedge is something that is worrying me. The 200 daily exponential moving average is the key support (resistance in May 2009) and is the key point in which I definitely will wear the bear suit. Meanwhile, a trading range between 10.600 and 9.840. In addition, the US dollar in an uptrend is something that give power to the bears.

S & P 500: 1222 possible?

This is one of the "road-maps" that I am following. It is possible?. Looking the previous posts, I think is something to be aware. I am not going short. The uptrend looks steady.


I think we can not go against the trend despite the apparent fallacy of the bull market.

I have been reading and listening a lot of reasons for the market to crash since Abril 2009. But the market does not listen to them. Then, I think them should listen to the market.

The fiscal tightening of China could be interpreted like something positive for the market, because it means that the economy is growing more than expected (!!!)

The systemic risk and the possibility of radical and political changes is something that were present in 2009 (and the market went UP UP UP).

Then, from the fundamentals, I think there is room for growth.

DAX in US Dollar

Notice the down trend-line (white line) and the candlestick pattern (short term reversal, yellow circle). In addition, the index is below its 21 EMA (white line) for the first time since March 2009. 

S & P 500 in euro: the soft bearish side

Some people ask me why to look the S & P in euro. I think looking S&P in euro you can eliminate the effect in the charts caused by the depreciation/appreciation of the currency. I am from Argentina, and when Argentina depreciated its currency (the 'peso") in 2002, the financial markets went up because of the depreciation effect. Then, in USA, the depreciation/appreciation of the US dollar is something that have a big impact in the SP500. Looking the SP500 in euro you change the US dollar fluctuation by the euro fluctuation, and then you have another valid and original view of the index. You can find for example which % of the ups and downs (or broken resistances / supports too) are caused by the currency fluctuation, additional targets, etc.

This chart does not looks bearish, but the target of the inverted head and shoulders have been reached.