How low does the Dow go?
I see that the MACD has once again turned down on the chart of the Dow Industrials Average. The DOW is currently at 12,040. Any guesses as to how much lower the DOW might go? There was an intra-day low of 11,6445 set on January 22nd, and 11, 644 set the next day. Is this the most likely downside target?
Best Answer
825 points
Dragonsbane answered one year ago …
We basically have 3 problems right now. All of which are coming to a head at once. We have a collapse in housing, a credit crunch and very high oil prices. Historically, any one of these factors has been enough to push us into recession. Now we have all three occurring at once, at a time when the consumer (who's spending accounts for the vast majority of GDP growth) is more levered than they have ever been. Financial instituations are also more levered than they've ever been - but I won't get into that. I think (and this is just a guess really) that we are going to enter a prolonged recession (far worse than the last two) and the DOW could see the lows we made in 2003.
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508 points
John answered one year ago …
It seems like the economic slowdown is going to continue through to the next year, i do not belive we will have negative GDP growth, but the economy is not ready to turn it around. Although many are saying this is a bottom and there are opportunities of a lifetime being created; Maybe but right now we continue to trade lower. We can not prtedict how low the Dow will go exactly, but we can all see the writing on the wall; there is still room to fall.
We casn see people making the mistake of calling the bottom, so they buy Citigroup waiting for a historuic opportunity, then the stock trdaes lower. You should never try and call a bottom. You should wait till technical indicators say the market is turning around. Unitl then i will not take anyones word. After the eary 2000 market slide it took two years for a substantial rebound. I also am not on board that all beat down stocks like Citgroup will rebound, some will not, so I will not be buying stock based on past peformance and the perception of a historic opportunity.
3930 points
MNSL answered one year ago …
Above gentlemen have given some good points. I like to add some more.
I think in the near term to medium there will be some violability in the DOW. It is hard to predict direction of the market at this time. If we want to bring bull back there should be improvement on sentiments and some turnaround in general economy including solution to current credit crunch and US dollar. I hope we can expect some sort of recovery in next 02 years. Present credit crunch has led to downfall of many financial institutions world wide and now it has become threat to world economy.
Now you can see severe beating in other markets such as India, china, Australia etc. as well. Under current scenario we can not see sustainable bull market in the near future. We are already experiencing in corrections in the stock market and real estate market. I think no sooner than later we can see corrections in commodity market as well. Lower commodity price will help to reduce cost of production, transportation etc. Inflation will come down. People will have more money to save and invest. In addition there should be some sort of solution to present credit bubble. Sliding of US dollar should be stopped. Oil price and other commodity price should come down. Until these cycles go through we can not expect sustainable bull market. This will take little bit time. However intelligent investors know what to buy ane in what markets according to situation.
