Charts suggest the market could find a bottom after a little more weakness, Jim Cramer says

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

“The charts, as interpreted by Tom DeMark, suggest that with just a little more weakness, this market’s finally got a legitimate chance to bottom for the first time since everything started rolling over last November. … I hope he’s right, and more importantly, I think he is right,” 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 in the market. The trend eventually exhausts itself when there is a certain number of sessions going in the same direction, he said.

He added that the key to finding a bottom is to identify when sellers have run out of steam, and everyone who planned to sell already has.

To start his explanation of DeMark’s analysis, Cramer first examined the daily chart of the Dow Jones Industrial Average.

According to DeMark, the Dow hit 13 on the buy countdown on June 17, but there’s a secondary countdown that’s still at 12, Cramer said.

“That means the Dow may have bottomed last month or maybe there will be one last downdraft that takes us to a lower low,” he said.

According to Cramer, DeMark also believes there are parallels between the Dow’s performance this year and in 1973, represented by the blue line on the chart.

“He was using the same 13-step countdown even back then, and it worked just as well as it does now. They believe the relationship is noteworthy and, if it holds, we see some more choppy trading for the Dow over the next couple of months, followed by a strong rally in September and October … but then a large decline into the end of the year,” he said.

“If DeMark is right, then right now we could be looking at an incredible trade,” he added.

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