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The Dow Jones Industrial Average (DJIA), is the top 30 Blue Chip stock whose performance is averaged each day of trading on the stock market. The components of the Dow Jones Industrial Average reads like a who is who in the stock market.

What is the Dow Jones Industrial Average?
Currently, the top 30 stocks are doing quite well on the stock market. Due to the small number of stocks that make up the DJIA all it takes it a few of the stocks to take a dive and the overall average can take a dip. It is good to analyze the sectors that make up the components of the Dow Jones Industrial Average.

Direct consumer contact stocks in Dow Jones Industrial Average:

It should be no surprise to most people that Wal-Mart Stores Inc is a component of the Dow Jones Industrial Average. Over the past three years the price of Wal-Mart had a price adjustment due to various management decisions. The $52 to $58 per share days of 2005 has seen a drop to $43 in 2007. This stock is expected to reach the $52 range again in the foreseeable future.

Another solid past performer Home Depot is trying to make a rebound from concerns about the housing market. Recently, Home Depot has seen some return to the range where it should be trading. It closed recently in the $38 range and should see some improvements to the mid $40 range.

McDonald’s Company is also on the road to recovery after a slump in 2005. Their healthy diet adjustments have improved the overall out look on the stock. It is currently trading at the high $40 range and should easily go higher.

Walt Disney Company is a stock with many hats. It is known for resorts and films, but it has a huge international presence in all types of communications and media outlets. The product line is extensive. It has numerous media outlets, including but not limited to ESPN, The History Channel and television stations. The stock is a value stock currently selling in the range of $33.

Technology stocks in the Dow Jones Industrial Average:

Microsoft Corporation,United Technologies, Hewlett-Packard, Verizon Communications, International Business Machines, AT&T and Intel Corp. round out the influence of technology influence on the Dow Jones Industrial Average. .

At this point an investor recognizes that if a sector is down for the day this will effect the overall Dow Jones Industrial average. More about Dow Jones Industrial Average.

Trading stock picks is a difficult concept to master unless a person can master the basics that Wall Street gurus use everyday in order to pick the best stocks. This concept is known as fundamental analysis. For those who are investing in the stock market and do not know what fundamental analysis is, they may have issues making money in the stock trading business. However, a basic understanding of this idea is needed in order to make money.

By understanding the basics of fundamental analysis an individual can begin to make money quicker when trading stock picks. A source that many refer to when understanding this concept is Ken Little. Mr. Little is a well known author of several financial books, and he can provide great insight into fundamental analysis. According to Mr. Little, “Fundamental analysis is the process of looking at a business at the basic or fundamental financial level.” The main thing to look at is certain key ratios of the business one wishes to invest in.

The main tools that fundamental analysis uses to do stock trading stock picks are earnings, growth, and value in the market. Earnings of a company are very important, however, they do not tell how the market sees the stock. In order to see exactly the full value of a stock, certain tools are needed to calculate the ratios such as earnings to price and price to sales. These calculations can help one decide if the stock is worth picking. But, professional trading sites such as cnnmoney.com and MSN MoneyCentral.com have already done the calculations. This makes trading stock picks even easier.

Trading stock picks can be fairly simple if one understands the basics. Research will be needed before beginning to invest in the stock market, and the first concept to learn about will be fundamental analysis and how this can help an individual make more money. A good place to start is Ken Little and his many books on how to make money in the stock market. The research on how trading stock picks can make money may take time, but in the end, the payoff will be great.

If you love watching the equity markets, the last few weeks have afforded quite the entertainment. Between still another investment bank failure, rising commodity prices and lower housing prices, its been a challenge to make money in this market. While its easy to say go long or go short, the wild price swings in the markets made it downright challenging trying to make a few dollars. Shares would move up 1%, then down 1.5% then rocket back up again - all in the same day.

So what is a trader to do?

It doesn’t matter if you trade penny stocks, look for a “safe” mutual fund at the mutual fund store, or are just looking to protect your capital, you need a plan.

There are really 3 choices in front of you. Depending on the depth of your pockets, how long until you’ll need the money and the degree of risk, one of these situations will fit you perfectly. However, there is a cost.

First choice: Go long…

The markets have always gone up. Sometimes, it just takes a little longer. And sometimes, it you will hit major lows before making newer highs. It all depends on perspective. If you bought shares in some high flyers during the late 1990’s and held, you’re probably still in a loss position. If you bought in 1995, you’re probably still sitting pretty, despite the very high levels of 2000. Will this time be different? Who knows. When the stock market crashed in 1929, it took over 15 years to get back to that level. If you have time on your side, going long works.

Second choice: Go short…

We’re in a bear market. Don’t confuse a move up with the end of a bear market. Most often, its just a signal to go short again. I like ETF’s like DXD, QID and SDS, since they allow me to go short, by going long since they act inversely to the market they are following. Keep in mind that they are designed to provide twice the inverse return of the markets they are following. If the Dow Jones moves lower by 1%, DXD will move higher by about 2%. Conversely, if the Dow moves up by 1%, this etf will move lower by 2%. Its not out of the question to see these ETFs move direction by 5-10% a week. Great if you’re in position when the trend is moving higher, catastrophic if the market is moving lower.

On other thing to keep in mind about ETFs: You can lose money, even when you break even. For example, lets say DXD moves down by 10% this week, and recovers 10% the following week. You would think you’d be even. You’d be wrong. If DXD is trading at $100, and loses 10% of its value, its worth $90. When it moves up by 10%, it moves to $99 - 1% short of break even.

Your third choice: Keep your cash

Yeah, its not as sexy and thrilling as trading, but right now, its the smartest thing you can do. The stock market will be around for awhile. Its better to keep the powder dry and when the market gains some footing, you’ll be ready to make like a bandit. Remember, we wont hit a bottom, until everyone gives up on the stock market. Without capitulation, we’ll see many more bear traps. Play it smart, and be ready to pounce when the time is right.

Penny stocks are not the only stock picks we have, our investor newsletter also has growth stocks, medium and long term investments to meet the needs of every trader. Our focus is to please our investors by helping in penny stock investing that’s why we continue to pick winning penny stocks each week. Penny stocks are typically not covered by analyst. As a result, penny stock companies have to rely on heavy promotional campaigns to get the word out about their stock. Penny stocks are speculative securities of very small companies, priced below $5, and generally trade over-the-counter, such as on the OTC Bulletin Board or in the Pink Sheets. Penny stocks may also trade on securities exchanges, including foreign securities exchanges.

For more information on making it big with stock investing visit penny stocks trading.

Stock analysis comes in two basic varieties: buy-side and sell-side. As an individual, you really never see the buy-side, which is created by and for institutional investors. However, you may be able to benefit if your mutual fund managers, pension fund managers or other professionals know how to make smarter investing decisions based on the information.

Sell-side analysis, or more freely available information, is designed more for individuals. It comes in two varieties: in-house and independent. In-house research is provided by brokerage firm analysts as a service to their clients, basically a way to stimulate activity and to encourage people to open and maintain accounts with them. Independent research comes from companies that are devoted entirely to creating, collating, and selling research such as Standard & Poor’s, Thomson Financial and Morningstar. There are, however, a few free providers of rich investing research such as Bullish Bankers and TheStreet.

Following a stock market recession earlier this decade, regulators investigated research analysts at major firms with investment banking arms. The resolution called for a $875 million global settlement that would require the firms to provide independent as well as in-house research through 2009. In addition, these firms must ensure that their analysts and bankers operate totally independently, so an analyst’s recommendation to buy won’t be tainted by personal interest.

When reading through investing ideas and stock research, it is important to buy what you know. Not all investors hunt long and hard to find good companies, and those that prefer to buy stocks of companies they know may perform better in the long term. One of the most perplexing decisions that you will face as an investor or trader is whether to buy stock in the company that you work for. Arguments in favor emphasize that you know a great deal about the company, from its strong points to its vulnerabilities and competitiors. Recognizing that your hard work will put you in a position to share in the companies successes may make the daily drive in to work all the more pleasurable. On the other hand, if you decide to focus your investments too heavily in any one company is making yourself more vulnerable to losses than if you diversified across market capitalization, sector and style. This is exactly what happened to the employees at Enron, and could happen to anyone.

The bottom line in an analyst’s report, either literally or figuratively, is whether or not you should buy the stock if you don’t own it (or buy more shares if you do), sell the stock if you own it, or hold the stock if you own it. When that recommendation is stated in the clearest possible terms, you are advised to buy sell or hold. If the analyst is very enthusiastic, a “strong buy” may be issued. There may also be a “strong sell” at the other end of the spectrum… although that ranking is quite rare in modern times.

Not to be confusing, some research reports use different language for the various actions that they suggest taking on a company’s stock. It’s easy enough to understand that “accumulate” would mean buy, but does “underweight” mean hold or does it mean sell? Research firms that provide consensus information or a synthesis of what sell-side analysts are saying, attempt to handle these differences by grouping together all the ways to say buy or sell under one term. Even then, a recommendation of buy/hold can leave you uncertain about what analysts really think.

One major issue is that buy recommendations frequently outnumber sell recommendations, even in periods of market weakness when this should actually be the opposite. That’s something to bear in mind if you are trying to evaluate the supporting details of an analyst’s report in relation to its conclusion. There are many different ways to get the research reports that you desire, but always remember just how analysts are going about preparing research, with some hidden intentions occasionally present in the investing ideas that go reported.