Forget 11,000. Here's What's Happening in the Dow

Although easy money on the part of the Fed might have investors embracing riskier assets like stocks, a look at what's happening in the blue chips shows that traders have been hedging their bets.

Expectations that the Federal Reserve will enact further measures to boost the economy have stocks on a winning streak. The Dow Jones Industrial Average ($INDU), that elite bastion of blue chips, added 1,000 points over the last six weeks and enters Monday's session above 11,000 for the first time since May 3.

Dow 11,000 is nice and all, but all it really means is that stocks have been dead money for five months -- and beyond. After all, the 11,000 level has never signified anything lasting for long-term investors before. The Dow first crossed above 11,000 in 1999 and has made the trip 37 times since then, according to Bespoke Investment Group.

Pushing and Pulling on the Dow

The Dow consists of only 30 companies, and since it's weighted by price, IBM (IBM) at $138 a share has more sway on the average than, say, Bank of America (BAC) at $13 a pop. Still, since the Dow gets so much attention, it's interesting to note how its components are pushing and pulling on the average.

The Dow is off about 1.3% since it last closed above 11,000 on May 3, damped in part by BofA, Hewlett-Packard (HPQ), Microsoft (MSFT) and American Express (AXP). The chart below shows how each of the Dow's 30 component stocks has fared since May 3:

Note that IBM is the only tech stock in the Dow to post gains since May 3 -- Intel (INTC) and Cisco (CSCO) are off substantially -- despite the sector's broader gains. (Special case HP took a beating after jettisoning former Chief Executive Mark Hurd.)

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Rather, defensive names predominate among the leaders: Verizon (VZ), AT&T (T), Merck (MRK), Pfizer (PFE) and Wal-Mart (WMT) are propping up the blue chips, as are consumer stocks like Coca-Cola (KO) and McDonald's (MCD).

AT&T and Verizon -- telecoms for heaven's sake! -- are bonds in drag. They don't outperform when investors have great expectations. A market playing defense is one that's anxious about the recovery. Whether the Fed can do anything about it remains to be seen.