The Dow Jones Industrial Average is facing another plummet as it hovers precariously close to November’s closing lows and the next few sessions will seal its fate along with other indexes, Edward Loef, technical analyst from Theodoor Gilissen Bankiers, told CNBC.
“You see the selling pressure mounting and we are now running out of time," Loef said. "I think we will break eventually below the lows of November because the 8,000 threshold has broken.”
The Dow closed at 7,555 Wednesday, only a whisker above the critical November low of 7,552, which many analysts agree is holding the index back from a sharp leg lower.
- Watch the full interview with Edward Loef to the left.
The next few days should reveal whether the index can hold, but prospects are bleak, according to Loef who cited the Dow Theory as his guide. The theory, derived by Charles Dow, is used by technical analysts to predict stock price movement.
“As long as we’re above the close in November, this is positive for the market. However, I think we will break eventually because every rally attempt we’ve seen in the last three-to-four months failed at the former highs,” he said.
The Dow Jones Transportation Index also faces massive declines, according to Loef.
“Below 3,000, there is no significant support until 2,000 so the risk of a decline of 25-to-27 percent in the transportation index is very likely,” Loef said.
The index closed at 2,766 points on Wednesday, suggesting its drop toward 2,000 was imminent.
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