IBM Is The Key to DJIA 10,000 (JPM, INTC, IBM, DIA)

The Dow Jones Industrial Average is literally within 20 points of the psychological DJIA 10,000 mark.  We have not seen Dow-10K since October, 2008, but that month we saw 11,000 and saw under 8,000 all in the same month.  JPMorgan Chase & Co. (NYSE: JPM), up over 3%, and Intel Corporation (NASDAQ: INTC), up over 2%, both DJIA components, are the two culprits that have us up to within 20 points now that the market is up over 100 points in early afternoon trading.  At 1:00 we had only 7 of the DJIA components in negative territory, and these are all down only by a few cents each.

But the biggest DJIA component is International Business Machines Corp. (NYSE: IBM), and it reports earnings tomorrow after the close.  As the DJIA is a price-weighted index, IBM is now the largest DJIA component with its $127+ price tag.  Its weighting in the index is over 9% as a result.  After Intel, it seems that you would expect a solid report.  Its services order backlog reported at the end of last quarter was a whopping $132 billion.  And many feel the bar is set low here for most large companies now this quarter.

Assuming everything stays static in the other 29 components (which never is the case), then IBM’s reaction to its earnings is going to be key to whether the DJIA gets above (or stays above if we break it today) and stays above that psychological 10,000 mark.

The DIAMONDS Trust (NYSE: DIA) just $100.00, implying a 10,000 level on the DJIA.  We may hit the 10,000 mark today, but where IBM trades is likely going to hold the key for the rest of the week as to whether or not the DJIA can hold that level.

To put this into context and for a reality check, despite how much better things are from March, the first time we hit 10,000 on the DJIA was March of 1999.

JON C. OGG