Posted By: Sam   Date: Fri Mar 28, 2008

Title: Why DJIA instead of S&P500

Message:
  Why is the DJIA used instead of the SP500? Isn't SP500 a more true measure of the stock market vs. a basket of just 30 large cap stocks?

Response:
  The DJIA and the SP500 are highly correlated. Forecasting either is a good approximation of the other. Below is a chart of DIA and SPY that shows their relationship.

You might also look at the correlation data presented here. The data is a little old but still relevant.