Dow Jones Industrial Average Appears to Be Getting Some Upgrades
On August 24, S&P Dow Jones Indices announced that it was making changes to the makeup of the Dow Jones Industrial Index. Exxon Mobil (XOM), Pfizer (PFE), and Raytheon (RTX) will be removed at the market open on August 31. Amgen (AMGN), Honeywell (HON), and Salesforce.com will be added to the index.
The changes mark the first time since September 2013 that multiple companies have been dropped and added at the same time. Two of the changes seem to be trading out similar companies. Amgen for Pfizer makes sense with both being healthcare companies. Honeywell for Raytheon makes sense since both are industrial companies with ties to the defense industry.
The one that doesn’t make much sense is swapping out Exxon Mobil and replacing it with Salesforce.com. Swapping out an oil company for a cloud-based software company seems a little odd. With the removal of Exxon Mobil, Chevron will be the only energy sector stock left in the index. The index will have six tech sector companies once Salesforce is added.
Looking at the new stocks versus the old stocks through the Tickeron Screener, it appears that the Dow is upgrading to higher rated stocks. On the fundamental side, Amgen scores slightly better than Pfizer with three positive indicators to only one negative indicator. Pfizer has three positive ones and two negative ones.
Honeywell scores considerably better than Raytheon with three bullish indicators and only one negative. Raytheon’s results are exactly the opposite with one bullish and three bearish indicators.
Exxon Mobil actually scores a little better than Salesforce on the fundamentals. Exxon gets two positive readings and two negative readings while Salesforce gets two positives and three negative readings.
On the technical side of the equation, Salesforce does considerably better with three bullish signals and zero bearish signals. Exxon gets one bullish and one bearish signal at this time.
Amgen does well on the technical side as well with four bullish signals to only one bearish signal. Pfizer is completely neutral with no bullish or bearish signals.
Raytheon does a little better on the technical analysis with two bullish signals to only one for Honeywell. Raytheon does have one bearish indicator while Honeywell doesn’t have any bearish signals.
In addition to being curious about how the stocks being removed compared to the stocks being added, I was also curious about the history of component changes. There have been lots of changes since 1929, so I focused on the instances where there multiple changes and the ones that have happened in the last 40 years. My goal was to find out if there was a pattern to how the market reacted after changes were implemented.
I couldn’t find a discernible pattern, but there were two instances where multiple changes were made and then a market correction started within the next six months. On March 12, 1987, Inco Limited and Owens-Illinois were replaced with Boeing and Coca-Cola. Of course on October 19, 1987 the market crashed in one of the worst days in market history.
The second instance occurred on November 1, 1999 and it saw Chevron, Goodyear, Sears, and Union Carbide removed from the index. The additions made at that time were Home Depot, SBC Communications, Intel, and Microsoft. Those last two were the interesting additions, at least to me. These were the first real tech companies that had been added to the index. The Dow would peak in January 2000 and proceed to fall sharply over the next few years before finally reversing in early 2003.
Another interesting note about the upcoming changes is that Honeywell was replaced by Chevron on February 19, 2008. As I mentioned earlier, Chevron will be the lone energy sector representative after the changes on August 31. Honeywell is now moving back in to the index. So Chevron has been removed and moved back in and now Honeywell is moving back in after being removed.
The overall structure of the index isn’t changing a great deal in terms of the sector representation, with the exception of Salesforce replacing Exxon Mobil. I would be more concerned about the changes possibly signaling a turning point in the market if we were seeing major changes to the sector representation.
XOM in upward trend: price rose above 50-day moving average on June 10, 2025
XOM moved above its 50-day moving average on June 10, 2025 date and that indicates a change from a downward trend to an upward trend. In of 42 similar past instances, the stock price increased further within the following month. The odds of a continued upward trend are .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Stochastic Oscillator demonstrated that the ticker has stayed in the oversold zone for 1 day, which means it's wise to expect a price bounce in the near future.
The 10-day moving average for XOM crossed bullishly above the 50-day moving average on June 13, 2025. This indicates that the trend has shifted higher and could be considered a buy signal. In of 14 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where XOM advanced for three days, in of 345 cases, the price rose further within the following month. The odds of a continued upward trend are .
Bearish Trend Analysis
The 10-day RSI Indicator for XOM moved out of overbought territory on June 23, 2025. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 44 similar instances where the indicator moved out of overbought territory. In of the 44 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Momentum Indicator moved below the 0 level on June 27, 2025. You may want to consider selling the stock, shorting the stock, or exploring put options on XOM as a result. In of 94 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for XOM turned negative on June 27, 2025. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 47 similar instances when the indicator turned negative. In of the 47 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where XOM declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
XOM broke above its upper Bollinger Band on June 10, 2025. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 51, placing this stock better than average.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. XOM’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: XOM's P/B Ratio (2.267) is slightly higher than the industry average of (1.194). P/E Ratio (13.160) is within average values for comparable stocks, (24.146). Projected Growth (PEG Ratio) (6.848) is also within normal values, averaging (4.841). Dividend Yield (0.032) settles around the average of (0.111) among similar stocks. P/S Ratio (1.416) is also within normal values, averaging (0.975).
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a distributer of crude oil, natural gas and petroleum products
Industry IntegratedOil
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