. October 19, 2006 SouthAmerica: If the Index is not doing as well as you want then replace the losers with stocks with better prospects for the future. I wonder what the index would look like if the dogs still as part of the Dow Jones Index. It is similar as if a company were allowed to use on the calculation of its performance only the divisions that were making money â when a division started losing money they were dropped from the calculation on behalf of a better bet. ************** DJIA - Components The individual components of the DJIA are occasionally changed as market conditions warrant. They are selected by the editors of The Wall Street Journal. When companies are replaced, the individual weightings are adjusted so that the value of the average is not directly affected by the change. On November 1, 1999, Chevron, Goodyear Tire and Rubber Company, Sears Roebuck, and Union Carbide were removed from the DJIA and replaced by Intel, Microsoft, Home Depot, and SBC Communications. Intel and Microsoft became the first two companies traded on the NASDAQ exchange to be listed in the DJIA. On April 8, 2004, another change occurred as International Paper, AT&T, and Eastman Kodak were replaced with Pfizer, Verizon, and AIG. On December 1, 2005 AT&T's original T symbol returned to the DJIA as a result of the SBC Communications and AT&T merger. The Dow Jones Industrial Average consists of the following 30 companies: Â· 3M Co. (NYSE: MMM) (conglomerates, "manufacturing") Â· ALCOA Inc. (NYSE: AA) (aluminum) Â· Altria Group, Inc. (NYSE: MO) (tobacco, foods) Â· American International Group, Inc. (NYSE: AIG) (property & casualty insurance) Â· American Express Co. (NYSE: AXP) (credit services) Â· AT&T Inc. (NYSE: T) (telecoms) Â· Boeing Co., The (NYSE: BA) (aerospace/defense) Â· Caterpillar, Inc. (NYSE: CAT) (farm & construction equipment) Â· Citigroup, Inc. (NYSE: C) (money center banks) Â· Coca-Cola Co. (NYSE: KO) (beverages) Â· E.I. du Pont de Nemours & Co. (NYSE: DD) (chemicals) Â· Exxon Mobil Corp. (NYSE: XOM) (major integrated oil & gas) Â· General Electric Co. (NYSE: GE) (conglomerates, media) Â· General Motors Corporation (NYSE: GM) (auto manufacturers) Â· Hewlett-Packard Co. (NYSE: HPQ) (diversified computer systems) Â· Home Depot, Inc. (NYSE: HD) (home improvement stores) Â· Honeywell International, Inc. (NYSE: HON) (conglomerates) Â· Intel Corp. (NASDAQ: INTC) (semiconductors) Â· International Business Machines Corp. (NYSE: IBM) (diversified computer systems) Â· JPMorgan Chase and Co. (NYSE: JPM) (money center banks) Â· Johnson & Johnson Inc. (NYSE: JNJ) (consumer and health care products conglomerate) Â· McDonald's Corp. (NYSE: MCD) (restaurant franchise) Â· Merck & Co., Inc. (NYSE: MRK) (drug manufacturers) Â· Microsoft Corp. (NASDAQ: MSFT) (software) Â· Pfizer, Inc. (NYSE: PFE) (drug manufacturers) Â· Procter & Gamble Co. (NYSE: PG) (consumer goods) Â· United Technologies Corp. (NYSE: UTX) (conglomerates) Â· Verizon Communications (NYSE: VZ) (telecoms) Â· Wal-Mart Stores, Inc. (NYSE: WMT) (discount, variety stores) Â· Walt Disney Co., The (NYSE: DIS) (entertainment) The DJIA is criticized for being a price-weighted average, which gives relatively higher-priced stocks more influence over the average than their lower-priced counterparts. This can produce misleading results, as a $1 increase in a lower-priced stock can be negated by a $1 decrease in a much higher-priced stock, even though the first stock experienced a larger percentage change. Additionally, the inclusion of only 30 stocks in the average has brought on additional criticism of the average, as the DJIA is widely used as an indicator of overall market performance. Another issue with the Dow is that not all 30 components open at the same time in the morning. Only a few components open at the start and the posted opening price of the Dow is determined by the price of those few components that open first and the previous day's closing price of the remaining components that haven't opened yet; therefore, the posted opening price on the Dow will always be close to the previous day's closing price (which can be observed by looking at Dow price history) and will never accurately reflect the true opening prices of all its components. Thus, in terms of candlestick charting theory, the Dow's posted opening price cannot be used in determining the condition of the market. .