DJIA, At Four-Year High, Will Rise Further

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The DJIA reached the level where it last was at the end of 2007, the year when the index peaked. At the close, the Dow was 13,279.32. Its all-time high of 14,164.53 was set Oct. 9, 2007.

There are a number of reasons the index will close in on the record before mid-year. The primary one of these is that many analysts believe the PEs of a number of large companies are still well below what their prospects should dictate.Among these are the financial firms in the index which have been beaten down by concern about consumer spending and their balance sheets. These include American Express (NYSE: AXP) and JP Morgan (NYSE: JPM). Microsoft (NASDAQ: MSFT) is also mentioned as an undervalued stock in the index in light of its recent earnings and the upcoming launch of Windows 8 which should cause upgrades of the operating systems on hundreds of millions of PCs.

Cisco (NASDAQ: CSCO) and Hewlett-Packard (NYSE: HPQ) are also mentioned from time to time because their prospects and assets are considered much better than their managements.

Douglas A.McIntyre