Is the recent week-long drop in the Dow a sign of what's ahead?
The Dow Jones Industrial Average index has been on a five-day losing streak and that has investors wondering if that’s a taste of what’s in store for October.
In the last week, the Dow has lost more than 360 points – 2.5% of its value. The biggest loser, Caterpillar, is down nearly 4% during this time period. Still, the index is up more than 16% this year.
Theoretically, the Dow Jones Industrial Average was created as, well, an average of 30 industrial companies. These days, it consists of more than a couple of financial services companies, fast food restaurants, and health-related stocks.
But, there was some good news yesterday for industrial companies which may have broader market impact. Orders for manufactured durable goods (cars, appliances, toys, and the like) rose 0.1% in August, according to the US Commerce Department. For the entire month, $224.9 billion in durable goods were ordered. Year-to-date, new orders for durable goods are up 4.1% compared to the first eight months of 2012.
(Read more: Durable goods inch up, boosted by factory sector)
So, what’s next for the Dow?
CNBC contributor Andy Busch, author and publisher of the Busch Update, takes a look at the Dow’s fundamentals. On the charts is Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grasyon. He sees signs of more worries to come.
What’s next for the Dow? Watch the video above to see Busch and Ross analyze the index and decide if it’s durable.
More from Talking Numbers:
- Consumer Discretionary
- Dow Jones Industrial Average