The current Dow Jones industrial average situation is often used not only for analysis of broad US stock market health but also for stock trading. Although the Dow Jones close price in mid 2012 is not near the DJ all time high, it is not very far.
But it does not matter what the direction of this index value will be during the next weeks or months. The bullish uptrend move, the bearish down trend move but also some trading range move for DJ average index could offer good trading opportunities.
These moves are easily tradable using some Dow Jones ETF securities listed on US stock exchanges.
Major Dow Jones ETF
Dow Jones ETF represents an easy way to participate in moves that all major industrial stock indexes do. The ticker for this exchange traded fund is DIA. This SPDR Dow Jones Industrial Average exchange traded fund is the most traded DJ index exchange traded fund.
This ETF could be used in all types of stock trading strategies. Very short-term day trading strategies that use index exchange traded funds could be traded with DIA. Swing and position ETF trading systems could use this fund ticker very well too.
This chart could be well used also for broad analysis of the current Dow Jones industrial average situation. It could serve as decision making analysis basis for trading other stocks listed on US stock markets, not only dow jones etf.
iShares Dow Jones stock index ETF
iShares offer another opportunity to trade this major stock index. IYY is the stock market ticker for Dow Jones U.S. Index Fund, which tracks the Dow Jones U.S. Index. This fund covers many more US listed companies than the industrial average index.
As you can see, these two charts paint a similar picture. The main difference between these funds is in liquidity, as DIA is a much more traded and liquid fund then IYY.
Leveraged Dow Jones industrial avg funds
ProShares offer several leveraged and short funds that track the current Dow Jones industrial average. These leveraged and short DJ industrial average funds track the change in current DJ industrial average precisely.
But they are not very usable for multi day or multi-week holdings, as they do not track multi-day or week performance of Dow Jones industrial averages values precisely. There is risk of using this type of funds for mid-term strategies. I personally like to use them only for current day trading index strategies or ETF swing trades lasting only a few days.
Major leveraged Dow Jones average index funds are DDM and UDOW. DDM is Ultra Dow30 which provides two times the return of the current DJ industrial average movement. UltraPro Dow30 exchange traded fund is 3x leveraged to current Dow Jones industrial average movements. The ticker for this ETF is UDOW.
Short Dow Jones average index funds
Short Dow30 fund with symbol DOG seeks a return that is -1x the return of an index for a single day.
UltraShort Dow30 with ticker DXD could be used for short and leveraged trading. It provides 2x leverage to today’s Dow Jones industrial average movements in the opposite direction.
UltraPro Short Dow30 is also a possible choice for short trading strategies with leverage. There is 3x leverage in the opposite direction to current DJ industrial average movement. The stock market symbol for this exchange traded fund is SDOW.
Here is an example chart of DXD
Tip for Dow Jones ETF trading strategies
Any of exchange traded funds above could be traded alone without the need for other analysis. The analysis of this single instrument or major Dow Jones industrial average value chart could be enough. It is possible to use the simple tool of technical analysis to determine the major trend and then select the appropriate strategy – bullish or bearish. Stock chart patterns could also be very useful for trader decisions.
I like to use relative strength analysis so I would also like to recommend using analysis of other major indexes for US stock markets like the S&P500, Nasdaq Composite or Nasdaq 100 index. Comparing the Current Dow Jones industrial average situation with these major indexes could provide valuable info about relative strength and weakness.