Wednesday, January 14, 2009

How low will it go? Dow's downturn will be steep

The Dow Jones Industrial Average has fallen all this week, now down below 8,200 and off 288 points on heavy volume despite there being no real, new bad news amid poor corporate earnings reports for the fourth quarter.

The question now for those brave and foolish souls in the market -- and those of us waiting to get back in to make killing -- is how low will the Dow go.

I thought I was being pessimistic in claiming the Dow would fall to 6300. But a lot of folks are making me into a Pollyanna with their predictions of 5000 and 4000.

That means those of you still in the market would lose another 50 percent of your money. War is hell, but capitalism can be worse for those on the wrong side of it.

2 comments:

TMAC said...

I think that the market today presents something much more upsetting than a correction/recession. Short term speculators will create instability in the Dow such that it will be very difficult to determine where the floor truly is. Even today we have to wonder if closing down represents a downward trend or just manipulation. With that being said I think the bottom will be when the Dow oscillates around 7600 with the low-low around 6900.

AA Member said...

I think that the correct estimate to how low the floor will sit on the dow will vary proportionally to the amount of time it will take for a recovery plan to be passed. It is obvious that the economic recession causing the fall of the dow will continue until the bottom is reached. I don't believe we should find out how low it will go, so just grab a beer and stop worrying. Obama will screw us over soon enough and throw the country billions of dollars in debt to the upcoming super power of the world. CHINA. However one thing is true. China also has a 600 billion dollar recovery plan of their own in an attempt to kickstart their economy, so where is all this money even coming from. Where will this money be when the music stops to this game of musical money? That will determine the floor of the dow jones industrial average.