The Dow Jones Industrial Average is not as widely followed as it used to be but Wall Street money managers still take a glance at it after they’ve consumed the Nasdaq 100 and the Standard & Poor’s 500 closing prices for the session. Those who’ve been paying attention have noticed its recent under performance.

Among the reasons the Dow has not been hitting new highs — the way that the Nasdaq 100 and the S&P 500 have — are that certain well-known, name-brand big caps aren’t keeping up with the hot AI-influenced tech names. As long as these stocks keep pulling the Dow Industrials lower, it’s a negative divergence.

4 Dow Industrial Components Now Down Trending.

The Cisco Systems daily price chart looks like this:

Years ago, this stock was considered one of the hottest in the tech industry. No longer. The 50-day moving average in December 2023 crossed below the 200-day moving average, a technical analysis warning. Cisco Systems now trades below the two moving averages, both of which trend downward.

Here’s the daily price chart for Disney:

The February gap up has been filled as the price gapped down in early May. There are now six closes below the 200-day moving average. You can see how the 50-day moving average is trending down as of early May. The January low of $88 is the next likely area of support — that’s where buyers took over from sellers last time around.

The daily price chart for McDonalds is here:

The classic fast food stock peaked in January at $297.50 and has failed to regain momentum despite a few rallies. Now trading at $245, the stock trades below both down trending 50-day and 200-day moving averages. Note that McDonalds is lower than the October/November 2023 lows.

Nike’s daily price chart is here:

The footwear company just keeps dropping. That big gap down in December 2023 ended an up trend. The 50-day moving average crossed below the 200-day moving average in late February. Now Nike has gapped down again in late June and trades well below the down trending moving averages.

And here’s the daily price chart for the Dow Jones Industrial Average:

The “average” itself appears to be up trending as the price remains above both the 50-day and the 200-day moving average. Here’s the issue: as the Nasdaq 100 and the S&P 500 hit new highs again today, the Dow is unable to make it up there. A big part of the reason is the lack of strength in the 4 components listed above.

This negative divergence between the big old Dow Jones Industrials and the S&P 500 and the Nasdaq 100 is a cause for concern about the larger picture for stocks.

Stats courtesy of FinViz.com. Charts courtesy of Stockcharts.com.

No artificial intelligence was used in the composition of this writing.

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