May 13, 2014 (Chinavestor) The Dow Jones Industrial Average (INDEXDJX:.DJI) advanced 112.13 points to 16,695 on Monday, a new record. The pace of advance is unusual and the index is now considered overbought, according to the following chart. The question is, what Dow components are most overbought?
The answer is found in the the following chart.The first observation: despite a strong Dow, its components are not trading at extremes. Rather most of them are just unusually strong but not super-strong.
3M Company (NYSE:MMM) is trading just $2 away from theoretical high prices and the pace of advance is unusually strong. This stock is considered overbought.
DuPont (NYSE:DD) is next on the list but is still far from the OB position.
Pace of advance is unusual for Verizon (NYSE:VZ) and Walt Disney (NYSE:DIS), according to the following chart. This fast advance in the last two weeks call for caution.
Looking for dogs of the Dow? Pfizer (NYSE:PFE) and Merck Co. (NYSE:MRK) actually fell hard despite the rally. This is well understood that pharma stocks are negatively correlated to the Dow and act as a safe heaven when things go bad. But right now they are the ones that don't get love.