Four Stocks Join The Pound Making 8 'Dogs Of The Dow' For 2016

The bull market for the Dow Jones Industrial Average ended in May 2015 even if this average sets another new high in 2016.

The weekly chart for the Dow 30 ended 2015 negative with the close of 17,425.03, below its five-week modified moving average of 17,441.01 and with its 12x3x3 weekly slow stochastic reading declining to 70.29 down from 75.64 set on Christmas Eve.

My proprietary analytics shows that the Dow 30 can trade as high as 17,797 in the first quarter, but that’s below the all-time high of 18,351.36 set on May 19. There’s an outside chance that a gain of 14% can occur in the first half of 2016 as my semiannual risky level is 19,914. The downside risk in January is to a monthly value level of 16,908 last tested on Oct. 14. The downside risk for 2016 is 16% to my annual value level of 14,592. If the 14,592 to 19,914 range is violated the direction is more likely to be a bear market move towards the 2008 pre-crash high of 14,198 set in Oct. 2007.

In 2016, eight Dow components qualify as the Dogs of the Dow. Four were dogs in 2015 and four new stocks qualify for 2016.

Most strategists describe the Dogs of the Dow as the highest dividend paying stocks in the Dow 30. My twist is to also consider the dogs for the next year to be those stocks that declined in price during the prior year (in 2015).

Here’s a 2015 scorecard for the 2016 Dogs of the Dow.

DogsOfTheDow2016

Caterpillar CAT +0.00% closed at $67.96 in 2015, down 25.8% and in bear market territory 26.4% below its 2015 high of $92.39 set on Jan. 2. The stock qualifies with a dividend yield of 4.53%.

CATWF

The weekly chart is negative with the stock below its five-week modified moving average of $68.89 with its 12x3x3 weekly slow stochastic reading declining to 36.11 down from 38.55 on Christmas Eve.

Investors looking to buy Caterpillar should employ a good till canceled limit order to buy the stock if it drops to $62.99, which is the low set on Sept. 28.

Chevron CVX -1.22% closed at $89.96 in 2015, down 19.8% and in bear market territory 20.4% below its 2015 high of $113.00 set on Jan. 2. The stock qualifies with a dividend yield of 4.76%.

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Disclosure: I have no positions in Caterpillar, Chevron, IBM, Merck, Procter & Gamble, Verizon, Wal-Mart, Exxon Mobil.

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