Jim Cramer did some analysis of individual stocks within the Dow Jones Industrial Average and sees the Dow at 8378 when the downside is complete. He is not making exact technical call on this number, but only a composite guess based on estimates of individual prices within the DOW. I decided to look at my charts and see if this level is realistic.
Looking at the 2002 to 2007 range, I see a 25% drop to the 1:8 Gann angle with is near the 8300 price level. The 7/8 retrace line is also near this range which should at least provide support for a tradeable rally.
Now looking at the 1982 to 2007 range, the 1:2 angle is 30% down and around 7850. Cramer was not making and exact call and only providing a reasonable level to watch. There is no reason price cannot overshoot Cramer’s guess and go to the 1:2 angle.
Using the Gann fan from the 1982-2007 ranges and projecting it to the 2002 low, the 1:2 angle here is 20% down and near 8800 on the DOW.
I am not predicting price will move to these levels at this time. I am only pointing out the next mathematical projection of price if congress does not get it’s act together. Senator Shelby of Alabama has said yesterday that he is willing to accept this drop and believes our system will be in a better position after the drop. My position is that if this drop occurs that it only sets up a bounce position of a very long term downtrend.
My guess is that history will judge Senator Shelby and his cohorts as it judges President Hoover’s actions in the 1930s. He is very bold with OPM… other people’s money.
Tags: Dow Jones Industrial Average · Gann Angle Fan6 Comments
6 responses so far ↓
You believe in Gann yet you believe in a baiout?!
Seems contradictory
Not contradictory. Price will do what price will do. Watch the charts and see where it is going (and when). The charts point to the actions of men. The actions of men don’t affect the charts. There at times when I don’t know which way the charts are going and guess by watching the actions of men. It really is a bad way to do it but I often get bored waiting for the charts to move…
Friday, Oct 10, 2008 the DOW reached an intraday low of 7882.
Using your perspective as outlined in your post, the appropriate Gann angle was 1:2 using the 1987 to 2007 price range.
The BIG question at this point in time is do we go to the 1:4 angle price level?
As to the bailout issue, obviously it had absolutely zero impact in terms of supporting price levels. It was sold to the public that it would support prices. Therefore, we must conclude it didn’t work.
Dow Jones Industrial Average
8,378.95 -312.30 / -3.59%
Oct 24 4:05pm ET
OK now I am even more impressed than I was the other day!
Chuck - Thanks for pointing that out. To be clear, that was Cramer’s number and not mine. Still pretty neat.
I know but I dont watch CNBC or pay attention to Cramer
So when hit your “crash scenario” and looked up to see the DOW at the exact level… “8378″ I about fell out of my chair!
Hilarious… and the Video is making the rounds right now!