Distressed Volatility

The Dow Jones Industrials just broke through a major 10,000 support level, which was created from the '94 and '02 lows. Jim is saying we could fall 20% from here and he could be right if we don't see a capitulation volume day with a reversal over 10,000. The post '87 crash to '94 bottoms, disregarding the tech bubble lows, brings us to 8,000 on the Dow, which is about 20% below today's levels. Click the chart for a larger view of these trends. If massive hedge fund redemption's occur and European banks keep failing, it's hard to tell what could prop up this market.

Jim Cramer on MSNBC (10/6/08)

Dow Broke Long Term Trend (Source: Barchart.com)