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Charts suggest the market could bottom after more weakness

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CNBC’s Jim Cramer on Wednesday said that the market could discover a bottom later this 12 months now that stocks have come down and Wall Street’s optimism has waned. 

“The charts, as interpreted by Tom DeMark, suggest that with just somewhat more weakness, this market’s finally got a legitimate likelihood to bottom for the primary time since every thing began rolling over last November. … I hope he’s right, and more importantly, I feel he is correct,” he said.

The “Mad Money” host said that DeMark and his team have a 13-step buy-or-sell countdown model that helps them find highs and lows out there. The trend eventually exhausts itself when there’s a certain variety of sessions entering into the identical direction, he said.

He added that the important thing to finding a bottom is to discover when sellers have run out of steam, and everybody who planned to sell already has.

To begin his explanation of DeMark’s evaluation, Cramer first examined the day by day chart of the Dow Jones Industrial Average.

Zoom In IconArrows pointing outwards

In accordance with DeMark, the Dow hit 13 on the buy countdown on June 17, but there is a secondary countdown that is still at 12, Cramer said.

“Which means the Dow can have bottomed last month or possibly there will likely be one last downdraft that takes us to a lower low,” he said.

In accordance with Cramer, DeMark also believes there are parallels between the Dow’s performance this 12 months and in 1973, represented by the blue line on the chart.

“He was using the identical 13-step countdown even back then, and it worked just in addition to it does now. They imagine the connection is noteworthy and, if it holds, we see some more choppy trading for the Dow over the following couple of months, followed by a powerful rally in September and October … but then a big decline into the top of the 12 months,” he said.

“If DeMark is correct, then straight away we could possibly be an incredible trade,” he added.

For more evaluation, watch the video of Cramer’s full explanation below.

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