World Blog by humble servant.The Dow and the rearranging of Index.

Interesting, as of August 31st which has been our Target for a turning point in the stock market on this immediate run, the Dow Jones Industrial index is being changed to Diversified the index by removing overlap between companies of similar scope and adding new types of businesses that better reflect the American economy . Three stocks being removed are Pfizer ,Raytheon Technologies and Exxon Mobil. The Dow Jones Industrial Average is weighted by Price, which is an interesting approach. This means that the higher the nominal share price of a component, the more effect that individual stock will have on the index performance. The S&P 500 is constructed by the market value of the company rather than the share price. This is what has prompted the change in the company of the Dow. Apple is splitting 4-1 so that will alter the value of Apple within the index since it is based on share price rather than the value of the company. In theory, if Apple did a split of 10-1 , it be kicked out of the Dow despite the fact that it is a 2 trillion dollar company. Additionally, the Apple split alone reduces The Waiting of Information Technology from 27.6%, down to 20.35% within the index. This results in apple declining from 12.2% to just 3.36%. This would rather this would further increase the importance of other sectors. You can see, the unusual construction of the Dow will lead to distortions in the index. Moreover, the Reconstruction of the dow

turning towards computer information technology has been recently the markets most dominant sector at more than 28% of the S&P 500 and a surging NASDAQ. Because of Apple's reduction in value, they have decided that the Dow needed to add more weight to Tech. Hint, they are adding Sales Force. Com with its shares valued at around 200 making it the six largest dial component at roughly 5% of the index average weight. The dow seems to be moving in Trends sectors, they include health care, which is the second largest sector at 14.2% of the sp's wait, adding and  trading over 200 replacing Pfizer, which of course  a major pharmaceutical component which has been the smallest value share around 40 they also added Honeywell to broaden exposure to Industrial replacing Raytheon technology. However, it appears that the dow is moving to embrace the new green deal. They are limiting its exposure to the energy by dumping Exxon Mobil, which has been included since 1928. Energy has declined in importance since the decline in oil prices which has resulted in that sector dropping more than 30%. Energy represents the smallest part of the S&P 500 Index at under 3%. These changes in the dow perhaps painted more current picture of the economy but removing Exxon is  what they see, - the new green deal. That is a forecast by them even if it's simply emerging from their subconscious. To change coming that very Target week in the dow  it  is fascinating they may be buying the high.