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THE MARKET WHISPERER 17 7

The Forgotten Index: Dow
Jones, DJI

The Dow Jones Industrial Average [symbol: DJI], also known simply as
the “Dow,” was developed by Dow Jones & Company. It is the most veteran
and famous of indices on Wall Street. The index is comprised of thirty of
America’s larger companies over a variety of sectors and is meant to act
as a “bell weather” index for the economy. Large numbers of investors
worldwide view the Dow as the main tool for following the US market’s
mood. It is most often quoted in financial media, but the Dow is the last
index that needs to interest you as traders. Stock exchange traders are
often smug when they come across investors who mention the Dow, which
these traders often call “the forgotten index.” The only reason it ranks
in the third (yet still highly respectable) position is not because you are
meant to use it, but because you will hear it abundantly quoted.

Keep in mind that Dow Jones & Company publicizes hundreds of
different indices relating to diverse sectors and various states. The DJI is
indeed the most famous of them all, but it remains only one of the many
indices.

Why do we not use the DJI? Firstly, because it is comprised of only 30
stocks, therefore is not truly representative of the market. Secondly, the
thirty stocks comprising the index are often the most “tired” stocks of
mega-companies which are highly lethargic. As traders, we need volatile
indices representing future expectations and not old histories of mega-
corporations. The Dow simply does not deliver the goods.

How is the Index Represented?

The DJI may appear in your trading platform without the $ symbol, or
preceded by or following the letter symbol: $DJI, DJI$ or DJI. If one of these
symbols does not match your trading platform, use the symbol search field
to find the symbol by entering this term: Dow Jones Industrial Average.

The DJI, like the SPX and the NDX, is not a tradable index, so you cannot
see any trade volume. None exists. The index moves during trading session
times and is a derivative calculated for 30 stocks traded in real time.