Cramer's Stop Trading! Dow Doomsday Scenario (3/6/09)

Stocks discussed on Jim Cramer's Stop Trading! TV program, Friday March 6.

Dow Doomsday Scenario:

When asked how low the Dow could go, Cramer thinks the absolute Doomsday scenario is a Dow at 5,320. Cramer said,"Frankly, after this analysis, I am more sanguine, not less, because of how harsh and disaster-oriented this line-by-line calculation is." He notes this is only about a 1,100 point drop from the current level and not a 2,000 decline to 4,000 some bears are predicting.

Alcoa (AA): It will probably be cut in half from $4 to $2…problems with the Alcan acquisition are to blame

American Express (AXP): Will be ravaged by the shorts and may end up at $2.

AT&T (T): will go to October lows $20 and has a safe dividend. Cramer thinks it will be a buy at that level.

Bank of America (BAC): Cramer doesn't see why this bank shouldn't join Citi and plunge to $1.

Boeing (BA): It's 5.6% dividend is not safe, and there are dangerously low aerospace orders. Boeing could take a dive below $30 to $24.

Citigroup (C): will remain a zombie at $1.

Caterpillar (CAT): currently has 7% yield and is trading at a premium of $21. It may cut its dividend and go to $15.

Chevron (CVX): has bottomed, but if oil goes to $33, it will see a rapid drop from $55 to $50.

Coca Cola (KO): "could turn out to be a stock that Warren Buffett has to sell in order to fund his big bank bets." Coke is a weak-dollar play in a strong-dollar environment. If it cuts estimates by 25%, we could see the stock in the mid 20s, but it is a good sign the dividend was raised. Cramer would "split the difference" and predict it may go to $30.

Disney (DIS): A good company with a lot of problems: expensive theme parks, DVDs and products people may not be buying. Won't go much lower than $12."

DuPont (DD): Is in danger and has exposure to autos and housing as well as drugs with patent problems. According to some predictions, it is going to $2, but Cramer says it will probably be more like $1.50.

Exxon (XOM): stays at $56 "because I'm a bull on oil."

General Motors (GM): The common stock will get cancelled.

GE (GE): "shorts have savaged it…goes to $3."

Hewlett Packard (HPQ): It is already cheap, but may drop to $24.

Home Depot (HD): even with steady housing decline and its dividend cut, Cramer can't see it going below $17.

IBM (IBM): In spite of good earnings, I think it could earn $8 and could sell at 10 times earnings, but he added "It wouldn't shock me to see this one back at $75."

Intel (INTC): its end markets and sales are terrible. Semiconducters are back to where they were decades ago…"Cut its earnings by 10%, cut its multiple by 10%, presume dividend OK for now, $10."

Johnson&Johnson (JNJ): could bottom at $40 and its yield would still be below average.

JP Morgan (JPM): Like all other major banks, it is going to the single digits. Cramer thinks it may go to $5.

Cramer reiterated that this is just a worst-case scenario for the Dow and hopefully not an actual prediction.

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Comments

[SilsantoS:]

Alcoa doesn't have any issue with Alcan acquisition since it was outbid for Rio Tinto. Rio Tinto formed Rio Tinto Alcan. They are in really bad situation.

Mar 09 08:22 AM

[Gravity404:]

Come on guys, remember this is Cramer.

Mar 09 08:59 AM

[Richard Col...:]

I looked up Jim Cramer on Google and I recommend you do the same before you follow his advise.

Dan Kowkabany

Mar 09 12:20 PM

[Richard Col...:]

Cramer is not even good background noise.
When CNBC folds, he can always seek employment with Ringling Bros.
The red wig may be the only makeup he will need.

Mar 09 01:24 PM

[Marc Courtenay:]

It's interesting to see how much publicity Cramer still evokes. His track record is questionable, but he is very well "connected", especially to the Goldman Sachs crowd. I'm still hoping for a Spring Bear Market Rally and then I'll be heading for the sidelines expecting that "the worst is yet to come". I hope I'm wrong and Cramer is too.

Mar 09 01:55 PM

[dsrtwriter:]

You know, there is a time when Cramer would be better just keeping his mouth shut. Who knows where things are going.

What does he want- credit if his lowball predictions are right? Maybe they will be higher, maybe lower, the fact is that he has no idea, so he should just shut up already.

Mar 09 02:26 PM

[Brutto:]

What a bunch of random rubbish, e.g.:

1. "Chevron has bottomed, but if oil goes to $33 it will see a rapid drop..."

2."Exxon stays at $56 because I'm a bull on oil"

Now that Cramer is talking down weaklings like Boeing, Coke, Disney, JNJ, IBM, Intel, maybe this is the contrarian indicator we've been waiting for....

Mar 09 07:36 PM

[Aristophanes:]

On Mar 09 02:26 PM dsrtwriter wrote:

> You know, there is a time when Cramer would be better just keeping
> his mouth shut. Who knows where things are going.

That's not a mouth. He's speaking out of his……

Mar 09 09:46 PM

[speculari:]

Cramer is the Spike Jones of the financial arena. But, that is hardly fair to Spike - Mr. Jones would be playing a Stradivarius, while Jim would be only tootling on a kazoo.

Mar 09 10:07 PM

[PeteK:]

SilsantoS;
If what you said is correst,
that means Cramer is lying about AA,
Can he lie like that ?
He'll be like that guy who lied about BBX.

Mar 10 02:14 AM

[mr freddo:]

Wasn't Cramer calling for a finish of Dow 15,000 at the end of 2007? He now represents the mind of the herd. If Cramer is predicting worst case of 5320, you can figure that he is a: wrong and the market is about to rally, or b: wrong and the market will go to 3200.

Mar 10 02:49 AM

[raytayzmd:]

...AMEN!


On Mar 09 08:59 AM Gravity404 wrote:

> Come on guys, remember this is Cramer.

Mar 10 11:23 AM

[PeteK:]

zagrebzagreb;
You are exactly right.
That guy should be thrown out to
the street. Only in America dogs like
that are allowed to bark non-stop. Other countries
would put them in cages already.

Mar 10 10:41 PM

[dchobo:]

so should we take cramer as a contrarian indicator? or is he just a random babbler?

Mar 11 06:27 AM

[Adam Hayes:]

cramer contradicts himself all the time.. man doesn't know anything it's all hype and hooplah .. and the camera always zooming in/out and switching angles gives me a headache.

Mar 11 12:34 PM

[SmartDude:]

Cramer.. its time for you to quit..
CNBC... its time to get him off your show..
America .. its time to stop listening to him..

He is wrong about everything.. looks like he is trying to manipulate the market by suggesting the opposite.. that way the price goes down and then somebody (in his network) buys it cheap..
He would then suggest everybody to buy it pushing the price up..

He did this with AAPL in 07.

Mar 23 05:33 PM

[chistletoe:]

Cramer is too close to the situation.
Any child can see that doomsday means "0" on the DOW ...
and imagine how it is going to come to pass ...

Mar 09 04:54 AM