Cramer’s worst-case scenario for the Dow Jones Industrial Average is a low of 5,320, he said during Friday’s Stop Trading!. And that’s with massive dividend cuts, selling by Warren Buffett, lack of leadership from Washington, bear raids and other possible negative events.
“I’m trying to figure out if everything went wrong,” Cramer said, “where we could go.”
He applied a bearish outlook to every Dow component, hypothesizing Microsoft dropping to $13, Disney to $12, Verizon to its October 2008 lows, JPMorgan Chase to $5, General Motors to zero and so on.
“I can’t get below 5,320,” Cramer said, “unless they change the Dow.”
That might actually be good news to some investors, given that many on Wall Street have been discussing a Dow drop to 4,000. So while the loss of another 1,100 points or so – the index is at 6,489 – would hurt, that possibility isn’t nearly as catastrophic as 2,000 or more points.
Disclaimer: Cramer doesn’t think the Dow actually will drop to 5,320. He just tried to calculate a worst-case scenario to find a potential bottom for the index.
Cramer's charitable trust owns JPMorgan Chase.
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