The weakness displayed on the price charts of these major, large capitalization Dow Jones Industrials is not a good sign for stock markets as a whole. Coming after a strong 2024, it’s an adjustment for Wall Street analysts to see how poorly these big names are performing just two months into the new year.
These former leaders are having trouble finding the upside again.
By downtrend, I mean that the price of each seems unable to power back up to or above the late 2024 high. That’s the first bit of price chart analysis, but there’s more. These stocks have dropped below the significant moving averages where it’s easy to make out the direction of trend, near-term and longer term.
4 Dow Jones Industrials In Downtrends
Caterpillar (NYSE: CAT)
The November 204 high is near $415. The January high of near $410 meets selling and goes no higher. You can see how the 50-day moving average (the blue line) began to trend downward by mid-December 2024. It looks as if it may cross below the 200-day moving average next or in a few weeks, a sign of further weakness.
That the price is below both of the moving averages is not a bullish look and that it’s dropped below the early January low of just under $350 reinforces that. A test of the September 2024 low near $325 may be next.
United Healthcare (NYSE: UNH)
The stock peaked in early November at almost $630. The re-test in early December made it up to just $620, a failure to establish a new high. After the long drop to the mid-December low, UnitedHealth could climb no higher than $555 before the selling began again.
The 50-day moving average crossed below the 200-day moving average in late January and remains below it. Last week’s big gap down in price to it to below the December low on huge volume as investors seemed to reach the “just sell it” stage.
Microsoft (NASD: MSFT)
The big cap name is unable to make it back above the early July 2024 high. The attempt to do so in December 2024 fails. The 50-day moving average has turned downward and appears about to cross below the 200-day moving average, signaling the intensity of the weakness.
Note that the price has dropped below the previous support levels of the early November 2024 low and is testing the low from early September 2024. If a more serious bout of selling begins, the August 2024 low near $380 may be tested.
Merck (NYSE: MRK)
Although the stock has rallied over the last few days, the price has along way to go to look bullish again. The 50-day moving average crossed below the 200-day moving average in early September 2024 and has remained below it since then.
The early February 2025 gap down took Merck below the mid-November low. If this month’s gap is filled, the stock would climb above the 50-day moving average.
More analysis and commentary at johnnavin.substack.com.
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