Dow’s up … but not as much as the rest of the market.

Punch line: The Dow 30 is up almost 10% in 2010.  But, for the past year, the Dow 30 stocks have been under-performing relative to all other stocks.

From Investor’s Business Daily …

The chart below shows each of the 30 Dow “industrials” and its relative strength, or RS, which is a measure of how the stock has done vs. all other stocks in the last 52 weeks.

Alcoa’s 63, for example, shows that it has outperformed 63% of the market; American Express’ 45 means 55% of other stocks have done better.

Market-leading stocks generally have relative strengths of 80 or better, and only Caterpillar and DuPont fit into that category or come close. Their performance, however, says less about what’s going on in America than about conditions elsewhere: 62% of their business is done overseas.

The same can be said of the Dow components with the next-highest ratings — Coca-Cola and McDonald’s.

The average relative strength of the other 26 is 38, deep in laggard territory.

Fact is, it’s been years and sometimes decades since these once-great and still-significant companies have shown true market leadership.

Source: IBD,What Really Drives The U.S. Economy?, 11/26/2010

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