For the first time in over a year, the Dow is actually challenging the 200-day moving average. Adding two new components to the Dow may provide the boost needed to break above this significant trend line. Would such a break, however, mean that the worst is over, or is another collapse still possible? It doesn’t happen often, but when it does; it’s kind of a big deal – changes to the Dow Jones (NYSEArca: DIA).
Those changes, however, are becoming more frequent. On September 22, 2009, Kraft Foods (NYSE: KFT) replaced American International Group (NYSE: AIG).
Ever since then, the Dow has been underweighted in financials. The reduced financial exposure explains why the Dow has performaned better than the S&P 500 (NYSEArca: SPY), over the past year or so. The Financial Select Sector SPDRs (NYSEArca: XLF) were the worst performing sector, up until the rally from the March lows.