Wednesday, March 18, 2009

Upside remains

The DJIA has bounced just 12% from the recent lows. The five highest-weighted stocks (totalling about 40% of the entire index) trade near half their average historical PE multiples and are poised to rebound. The bottom five could fall to zero (a possibility more remote by the day) and cost the index a mere 2.8%. These are very bullish signs, and are why the DJIA has more upside than the S&P500, specifically because of its silly weightings methodology.