Which Way Wednesday – Topping Or Popping?

It's a brand new all-time high for the Dow, which is not, of course, the same Dow as we had in 2007 but let's not sully our victory with facts, right?  

OK, lets:  In Feb 2008, MO and HON were replaced by BAC and CVX, then AIG was replaced by KFT that September and in June, 2009, C and GM were replaced by CSCO and TRV and then KFT was replaced by UNH last September.  

MO was a great drop, it's half of where it was in 2008 (was split off), HON is up 10 points but AIG is down 200, C is up 10 GM is a whole new company so hard to judge now and KFT split up so at least a 190-point drop from the Dow Components that were dropped since we made our highs and that would have cost the Dow at least 1,600 points had they not been ALTERED – more than 10%.  

And what did the new components do for the Dow?  BAC was a poor choice, dropping 30 since 2008 while CVX made up for it with a 33-point move up.  CSCO has gone nowhere but TRV was a 40-point winner since inclusion and UNH is about the same so let's call it 40 points added by new components for 320 Dow points (roughly 8 points per Dollar) but now we're talking about a 1,900-point swing between the old Dow and the New Dow so let's not be too impressed with matching the 2007 high when the deck has been stacked so heavily in the Dow's favor.  

As David Fry notes on his Dow chart, it's all about QE and ZIRP but those are facts and he makes reference to Zero Hedge, who had a table outlining other economic conditions that have changed a lot since the October 2007 high:

• Dow Jones Industrial Average: Then 14164.5; Now 14164.5

  Regular Gas Price: Then $2.75; Now $3.73

  GDP Growth: Then +2.5%;

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