Today, most of the financial media is hype-driven headlines and attention-span-destroying garbage. That’s why everybody ignores the finer things, including an old-school indicator. But it says we should be buying stocks, remarks JC Parets, founder of AllStarCharts.
Polarity is in play with the Dow Jones Composite Average (DJC):
The red arrow points to prior-cycle highs. The green arrows point to where those prior-cycle highs provided support during drawdowns.
Why do I care about the Dow Jones Composite Average? And why should you care about it? After all, it only exists because of the indexes that preceded it. You know the old saying, “We stand on the shoulders of giants?” That’s the DJC.
According to the Library of Congress, the legendary Charles Dow first published the Railroad Index in the Customer’s Afternoon Letter in 1884. The letter was a daily financial news bulletin and a precursor to the Wall Street Journal.
The Railroad Index included 11 stocks, highlighted by the New York Central and Union Pacific railroads. It wasn't even a “Dow Jones” index yet. That came later.
In 1929, Dow Jones created the “Big 3,” introducing the Dow Jones Utility Average (DJU). The index managers formally removed any utilities stocks that were originally included in Dow's Industrial Average. There are 15 stocks included in the DJU to this day. And, in 1970, the Railroad Index officially became the Dow Jones Transportation Average (DJT).
Now let’s get back to 2025. The Dow Jones Composite Average combines them all – it’s made up of 65 stocks. It includes all 30 stocks in the Dow Jones Industrial Average, 20 from the Dow Jones Transportation Average, and 15 from the Dow Jones Utility Average.
When you combine these 65 stocks into a price-weighted index, you get a heck of a look at the US economy. The Dow Jones Composite Average is a collection of data and analysis tools that date back 140 years. I’m proud to say I use it every day.
And today, it says we should be buying stocks. Are you with me?
