Cramer: Dow 7350 Was the Low

A bottom-up analysis of the components suggests we won't hit that mark again in this cycle.

Author:: Jim Cramer
Publish date:: Dec 4, 2008 12:01 PM EST

A bottom-up analysis of the components suggests we won't hit that mark again in this cycle.

This post appeared earlier today on RealMoney. Click here for a free trial, and enjoy incisive commentary all day, every day.

Is the fix in? Do we have a bottom lurking -- a la Doug Kass' statements? I know that to get back to

Dow

7350 -- the intraday low -- will take some real work, but

Du Pont

(DD) - Get Report

Merck

(MRK) - Get Report

and

AT&T

(T) - Get Report

are doing their best to create it!.

When I say "the fix," I mean that there are enough buyers out there without redemptions -- as opposed to Legg Mason's Bill Miller, who reminds me of some of the tech managers who never recovered after 1999 -- who are going to do their best to prop up prices.

Can it be done?

I think so.

But that's because of the makeup of the Dow.



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Consider that

McDonald's

(MCD) - Get Report

Coca-Cola

(KO) - Get Report

Procter & Gamble

(PG) - Get Report

Johnson & Johnson

(JNJ) - Get Report

and

Kraft

(KFT)

all benefit from this new commodity environment. AT&T and

Verizon

(VZ) - Get Report

have scale benefits that made their lows of $20 and $23 seem like gifts. Same with

Wal-Mart

(WMT) - Get Report

, which you see today. It is tough to take

Home Depot

(HD) - Get Report

back to $17 given its high yield and the refinance activity.

Pfizer

(PFE) - Get Report

and Merck are quandaries. Their wounds and declines are self-inflicted. I don't think they can go much lower, because their dividends are safe and can make their lows unbreachable now that bonds are so low in interest.

Microsoft

(MSFT) - Get Report

can go back to $17, no problem -- that was the low.

Intel's

(INTC) - Get Report

got dividend protection.

Hewlett-Packard

(HPQ) - Get Report

is doing well but it's still vulnerable, although it is hard to believe it can go to its low of $28 given that it just surprised to the upside.

Chevron

(CVX) - Get Report

and

Exxon

(XOM) - Get Report

are extremely vulnerable with the decline in oil because they keep rallying. They have been totally immune to the decline, which is what makes me feel that oil will rise eventually. Right now they can get smacked, but I go back to "the fix is in," as these stocks have simply stopped trading with the rest of the oils.

General Electric

(GE) - Get Report

just reiterated its projections -- first time for that, so I think that it will be hard for that one to take out its lows.

The banks are a question mark in terms of their lows, as systemic risk is off the table, so I don't think that

JPMorgan

(JPM) - Get Report

Citigroup

Bank of America

(BAC) - Get Report

have a ton of downside, as they might have before TARP and all of the federal moves to help them. Same with

American Express

(AXP) - Get Report

, although it's more vulnerable because it is poorly run.

Which leaves the swing votes:

Caterpillar

(CAT) - Get Report

United Tech

IBM

(IBM) - Get Report

Disney

(DIS) - Get Report

(MMM) - Get Report

Boeing

(BA) - Get Report

Alcoa

(AA) - Get Report

(GM) - Get Report

and Du Pont. The last four are in real trouble, as we know from Du Pont's forecast, GM's potential equity wipeout and Alcoa's potential dividend cut. They are the weakest and could take out their lows. Boeing's got nothing going for it because of the strike. I suspect

all of them

will take out their lows.

But they don't have a lot of points to them!

That means CAT, UTX, IBM, MMM and DIS pretty much determine how much lower we can go, and I don't see any of them being able to take us back to Dow 7350.

So is the fix in to not break the lows? Given this bottom-up look, it would be very hard to drop more than 1,000 points. Very hard, especially given the newfound view from many people that "the bad news is in."

We all feel it, the better "tone." I don't like to bet on tone. But I feel it, too.

We had terrible tone at Dow 7350. It can always return, but we see how MOST components are at least slightly better off than the last go-round.

That matters.

So I would say, yes, the fix is in.

At the time of publication, Cramer was long Chevron, GE, Hewlett-Packard, Johnson & Johnson, JPMorgan, Kraft, McDonald's and Wal-Mart.

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