Equity exchange traded funds have been strong in October, with S&P 500 ETFs climbing very close to their 200-day simple moving average.
The blue chip index is now above the 50% retracement level from the early August sell-off. [S&P 500 ETFs Break Out]
Meanwhile, the Dow Jones Industrial Average has climbed over its 200-day moving average. SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) gained nearly 1% on Monday.
DIA qualifies as a “mega cap” ETF and is based on the Dow index that contains 30 U.S. listed equities and the index itself is calculated using a price weighted methodology.
Mega cap, refers to companies that have market capitalizations that exceed $100 billion.
Critics of the Dow will point to this price weighting as a shortfall, in that it does not provide a true representation of what the “market” is doing, but instead the index is heavily influenced by the higher priced stocks (from a dollars per share standpoint) among the group.