MDA - Market Direction Analysis

[augieboo]

INPUT REQUESTED: Most Important Stocks to Watch??????

I've been trying -- without much success -- for quite some time now to come up with a personal "short list" of individual issues to watch on a regular basis as an adjunct to the indicies. My intent is not to trade these stocks, but to use them to help me understand how the indices are moving. Thus they should be stocks the movement of which has a relatively strong effect on the movement of the indices.

My major problem has been in keeping the list to a manageable number. But now I think I've hit on a methodology for picking these stocks that makes sense, and I'd like to hear what others think about it.

The indices which are most important to my trading are the COMP/NDX, SPX, & INDU.

COMP & NDX are fairly easy, because they both use the same market-cap based weighting system and the NDX is, I believe, actually a subset of the COMP. Plus, the exact weighting given to each stock is available from Nasdaq. So for this component I simply took the ten largest NDX stocks in terms of weighted percentage of the NDX. They are:

MSFT
INTC
AMGN
CSCO
QCOM
CMCSA
DELL
ORCL
EBAY
MXIM

For the SPX I used the ten largest companies in terms of market cap. They are:

GE
MSFT
WMT
XOM
PFE
C
JNJ
AIG
IBM
MRK

For the INDU I had to adjust a bit, since that index uses the rather strange (I think) convention of basing its weighting on the price per share of each issue rather than the market cap of the underlying company. The ten highest priced stocks on the INDU are:

MMM
PG
IBM
UTX
JNJ
MRK
WMT
CAT
KO
DD

Putting the three lists together gives me the following:

MSFT
INTC
AMGN
CSCO
QCOM
CMCSA
DELL
ORCL
EBAY
MXIM
GE
WMT
XOM
PFE
C
JNJ
AIG
IBM
MRK
MMM
PG
UTX
CAT
KO
DD

I then give extra weight to those stocks which make any two of my lists as well as to INTC (because it, along with MSFT, is one of only two stocks which appear in the COMP, NDX, SPX, & INDU.

Thus I have the "A" list:

MSFT*
INTC*
WMT*
JNJ*
IBM*
MRK*

and the "B" list:

AMGN
CSCO
QCOM
CMCSA
DELL
ORCL
EBAY
MXIM
GE
XOM
PFE
C
AIG
MMM
PG
UTX
CAT
KO
DD

Together they total only 25 stocks, but I think they are a pretty decent representation of the overall large-cap market and the indices.

Comments??????