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Breaking Down the Dow Jones Industrial Average (DJIA)
June 12th, 2010
This past week the Dow Jones Industrial Average (DJIA) rose 279 points or 2.81% after tumbling over 1200 points in the month of May. Uncertainty looms as influential financial networks continue to publish articles along the lines of "The Worst is Ahead" or entitled, "Why the Bear Market isn't over yet". Resultantly, investors are caught in a chaotic medium that is limiting their ability to think clearly and make intelligent investment decisions. So how do we rid ourselves of this 'noise', as Robert Kiyosaki described it in Rich Dad Poor Dad?
The answer lies in removing emotion. That means fear, excitement, anxiety and any other human attribute from which our financial decisions may suffer.
The good news is that we needn't invent a solution. It has been invented and tired to death, yet millions worldwide still fail to recognize technical analysis (TA) study. Time and time again we break down the market's chart into clear and simple components that allow us to better understand trends. This helps reduce our margin for error, promote intelligent investment decisions, and allows for effective positioning. This time we break down the Dow Jones Industrial Average (DJIA) into daily and weekly intervals to understand how it fits into the 'big picture', the monthly chart.
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