Breaking Down The Dow Jones Industrial Average

dow 13000Corey Rosenbloom: While many stocks are seeing downside selling pressure in 2014, let’s take a closer look at those select names in the Dow Jones Industrial Index (INDEXDJX:.DJI), – Blue Chip Stocks – which are making larger than normal breakdowns.

To quantify “larger than normal,” I ran a stock scan for stocks that have moved 6 times their average daily true range (ATR) away from their recent swing high.

These stocks are a combination of “low volatility into high volatility” (breakout) and also sustained price movement away from their prior high.

Let’s take a quick ’scan’ look at these names and use them for possible candidates:

Boeing BA Daily Chart

Again, for inclusion in this scan, a stock must move at least six times the current ATR away from its prior price high.

For example, Boeing (BA) above registered a price swing high near $145 per share in mid-January.

The current daily chart ATR (Average True Range) value at the time was roughly $2.00 per share.

A sell-swing from the $145 peak to the current $123 level resulted in a $22 sell swing which is roughly 10 times the average true range.

For reference, after the sell-swing, the current ATR value is roughly $3.00 per share, and by this updated calculation, BA is still roughly 7 “ATRs” straight down from its $145 peak.

Keep in mind that the “Average True Range” reflects the volatility – daily price movement – over the last 14 days.  A stock moving multiple “ATRs” in the same direction indicates a quantifiable measurement, especially when we compare “ATR Multiples” of other stocks.

The following stocks have all moved at least 6 times their daily ATR value away from their prior high which indicates a sustained movement in the same direction – it calls our attention to these Dow Jones names.

Chevron Corp (CVX) not only moved down from its $125 high, but also broke free of its $166 per share horizontal trading range (rectangle):

CVX Chevron Daily Chart

General Electric (GE) is a low volatility stock (daily ATR near $0.30) yet it has moved sharply down from the $28.00 high to the key $24.50 focal point:

(...)Click here to continue reading the original article: Breaking Down The Dow Jones Industrial Average [The Boeing Company, Chevron Corporation, General Electric Company]

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