Transcripts For CNBC Mad Money 20171227

Stocks give that i base almost all my work on fundamental factors related to the companies i study and not the shape of their charts, the offthecharts segment is both theoretical and antithetical to my traditional stockpicking methods, but i know from your feedba feedback jimcramer on twitter, that youre interested in this analysis and importantly, its proven itself time and time again to really get a lot of people involved at the right level, say . Not for a minute, as i explain in get rich carefully, where i devote a whole chapter to charting, have i become a chartist myself. I still single out stocks to highlight and teach about after studying the fundamentals, the research, the annuals, the sectors, and i overlay them on my broader world view at the moment charters can care less about this stuff they often dont care what the company does i wonder if they could do their jobs with the Companies Names blacked out. In fact, i am sure they could. Some of them hate the distraction of of knowing much at all about a company for fear it would bias them against the stocks chart. Can you imagine . Now, ive become pretty proficient in charting over the years, but i still rely on the individual work of professional technicians to demonstrate how they use charting and learn techniques that i can in turn teach you. Thats why tonight i am picking the best of the best charts of some of the best of the best technicians we have worked with, exploring the patterns that have become reliable to the point where im pretty astonished at how accurate they can be so i guess youve got to call me a longterm believer hey, you know what, thats why ive started nearly every saturday morning for the last 30 years, reading the sarah palin trend line daily action stock charts, formerly on paper, now in electronic distribution, and they contain hundreds of of charts i match them with the patterns ive learned over time they often become segments on the show that you see later in the week why do the charts work thats what people always want to know. First, you must consider them as if they are footprints at scene of a crime these footprints trace out what big Money Managers might be doing with their buying and selling of dollars these portfolio chieftains at large funds often know more than others, including you and me the charts of where their money goes, the charts of the stocks, put together clues that these big boys leave second reason to care, theres a remarkable selffulfilling nature of charting stocks. So many professionals look at these drawings and take them to heart that they will simply avoid stocks with predictably terrible charts and find stocks to own, stocks with charts that have had positive moves in the past dont i know it . When i worked with karen cramer, an inventor, chartist at my old hedge fund, she would look at the charts each morning, looking for breakouts and breakdowns and had me research the ones with the most predictable patterns to get a handle on what might really be going on we got some of our best ideas from some of those sessions. A true and successful melding of the technicals and the fundamentals to produce excellent short and longterm results. All of charting Technical Analysis starts not just with the pictures of individual stocks, but also what are known as the internals internals. Patterns about stocks in the aggregate that give you clues to the direction of the entire stock market for years, ever since the Great Recession that showed the inherent weakness in our financial system, the socalled Systemic Risk i talked about, there has been tremendous skepticism about any advance of stocks while i believe the Systemic Risks have been reduced, i know each rally creates really a worrisome set of risks i know you fear that youre coming in at a level that could turn out to be, lets say too late, too high, and you will lose money either way. Sell, sell, sell [ screaming and crashing ] Technical Analysis includes indicators to help you determine the overall direction of the market more important than ever given that so many stocks are influenced mightily by the tug of the s p 500 stock futures sometimes to technicians, everything hinges on putting together the charts of individual companies and the charts of the bigger averages to create comparisons that illuminate conclusions about true market strength, looking for what is known as confirmation of a move to detect its legitimacy i think confirmations are incredibly important to the safety of a move they need to be explained closely. The most important and obvious confirmation lets say the dow jones average hits a new high, okay . Historically, that will not be sustainable unless the dow jones transportation index also hits a high or confirms the breakout status of the dow itself [ mooing ] the dow jones transportation index is a measure of commerce, tracking trains, planes, truck, Freight Forwarding come on, thats, really, isnt that a good gauge . If both the industrials and transports hit new highs, i often tell you that the move is legitimate and it can be trusted it is real this is some of the oldest Technical Work dating back to charles dow, founder and first editor of the wall street journal who created the dow theory to validate rallies or defrock them you often hear at the top of the show that i like how the transports are acting. Thats because im trying to see if the move is staying power in order to bless it. I look at a host of other indicators the banking index is important to me, the housing index, i look at the semiconductor index, theres stoxx, and the rth, that etf that encompasses the big retailers. I like to see all of these indices move up in sync before i truly bless a market move for you. You have to put the maximum amount of chips on the table oh, boy, but is the inverse true if we get a move, a move up without confirmation from majority of these indices, the whole rally could be a fakeout. [ booing ] and cant be trusted the classic example. If you go back to the move up to record highs before the Great Recession, you wont notice something pretty incredible if you go back and study it you will notice that there was almost no participation among the financials, the retailers, or the techs Technical Analysis got you out of that market before it was too late, if you follow those indicators did much better than the fundamentals what are the other internals i look at . I analyze the advances and declines, figure out whether the rallys too concentrated i like a market with good breadth or a lot of participation by many different groups i also look at the new high and new low ratio. Remember, it isnt easy to get on the new high list first, the company has to be doing exceptionally well second, the sector has to be strong, and geopolitical tensions and politics have to be aligned to make some stocks successful enough to get on that new list the high list is rarefied territo territory. You run the gauntlet, you end up with a stock id rather pull back and if there are a lot of stocks on the new high list for many industries, thats a terrific song so, heres the bottom line, you may not be a technician, but you need to know what the charts are saying and you need to know how to read the internals to verify a real move or a phony one stay tuned and well go over a whole host of predictive patterns thats used pretty much everything we do around here, not just on the offthecharts tuesday, but in Stock Selection every single day jim in michigan jim. Caller jim, hi how are you . And thanks for taking my call. Of course thrilled that you called whats up . Caller ive got a question for you. In this segment, you were talking about secular stocks could you define for me once again what is secular stocks, and maybe give me an example or two . Certainly and look, this is a very important issue because its a term thats thrown around, secular, parochial secular means, a secular growth stock is something that does not need the Gross Domestic Product of the world to increase in order for it to beat the numbers. Some of the classic secular grower stocks would be some of the biotechs, some of the retailers that have terrific growth gary in california gary caller mr. Cramer, booyah to you. Booyah, gary caller this is gary from california my questions regarding dividends in a down market, sir. If youre accumulating dividends on a number of stocks, as you suggest, is it better to reinvest them in a down market or to take the money as cash and then possibly reinvest that in other opportunities . Well, you see, we dont know when a down phase is going to end, and we know the power of compounding is an amazing thing, so were going to stick always on this show i know it sounds pretty pedestrian, but were always going to opt in favor of reinvestment because fortunes have been made through the power of compounding identify g ive got to go with that, regardless of the nearterm consequences, because im thinking longterm for you fundamentals, oh, theyre key, but technicals matter, too tonight im bringing you into the world of mastermind chartists so you can learn to see the whole picture behind a stocks moves. On mad tonight, we know the charts important, but what technical tool can help you detect floors and ceilings im revealing it then, how can you tell if a company is overbought and ripe for a pullback or oversold and ripe for a bounce . And mixing patterns isnt only for fashion. Im highlighting the patterns worth banking on when it comes to investing, so why dont you stick with cramer . Announcer dont miss a second of mad money. Follow jimcramer on twitter have a question . Tweet cramer madtweets. Send jim an email to madmoney cnbc. Com. Or give us a call at 1800743cnbc miss something head to madmoney. Cnbc. Com. Your brain is an amazing thing. But as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. daniel jacob for every hour that youre idling in your car, youre sending about half a gallon of gasoline up in the air. That amounts to about 10 pounds of Carbon Dioxide every week. malo hutson growth is good, but when it starts impacting our quality of air and quality of life, thats a problem. So forwardthinking cities like sacramento are investing in streets that are smarter and greener. The solution was right under our feet. Asphalt. Or to be more precise, intelligent asphalt. By embedding sensors into the pavement, as well as installing cameras on traffic lights, we will be able to analyze the flow of traffic. Then that data runs across our network, and we use it to optimize the timing of lights, so that travel times are shorter. Who knew asphalt could help save the environment . Tonight we are offering the best of the best of Technical Analysis, a onestop shop of everything you need to know to augment your investing with the help of some of the best chartists in the land. Now, lets work on something thats been the province of the best chart work on the show, spotting bottoms for best entry points and examining ceilings for the best places to exit or sell when you pick individual stocks, you are betting from the moment you buy them that theyre going to go higher i know, its a Pretty Simple concept, but how often do you do solid fundamental work on a company and try to figure out whether its the right thing, the right decision to pull the trigger because your homework is finished and then, well, it just shouldnt be a terrible time, and youre buying oblivious to the stock. Hey, my homeworks done, lets go buy maybe its not the right moment. After all the work ive done on the off the charts segments, i say youre being shortsighted if you dont check out how the stock looks technically after your homework. But after you put in the buy order, i consider looking at the chart of the stock you look as part of the homework get that in your head get it engrained into your thinking sometimes finding bottoms after long declines can be incredibly lucrative. A good example, lets go back to the bottom of 2009 now, i had a sense that the declines velocity was lessening. I had already heard the lategreat mark haines make his bottom call based on his innate feeling and my friend doug cast from real money pro, sometimes known as an aggressive bear, had turned positive he was saying we were at a generational bottom. But i was still skittish about picking any individual stock to recommend to you so i was looking for a situation that seemed about as bulletproof as i could find. I came up with at t, the phone company. It had so much going for it. Now, youve got to go back in the wayback machine, but it included a smashing rollout of the apple iphone, which was going to produce record profits as at t took business from apple as competitors, had an outsized dividend at 6. 2 at that moment, much higher than any stock in the dow. The dividend was safely backed by at ts humongous cash flow. Still, though, the stock kept plunging every time i thought it might have firm footing. I had done my research, thought it was time to buy no no check the chart. So i waited for a few days where the stock seemed to stabilized and decided at last it might hold in dicey moments like these, its best to check with a chartist, so i did i actually broughtin four chartists. They had all amazingly agreed at t found a Strong Foundation and was good for considering for an investment. They didnt care at all about the fundamentals take a look at what attracted them on this chart first, all four technicians agree that at t had established what is known as a climax low at 21, back in the tsunami of selling that was this period, okay and youve just got to understand that we are just at one of these moments that was just so hideous. You can see the big lift, big lift in stock, and then, well, lets just i dont want to give away the story. Thats where lots of sellers had capitulated. This is where they capitulated, right here but buyers had started to step up to create a base, okay . See the extended base . Floor at the stock at that level. They arrived at that judgment by looking at where the volume, the sum of all transactions during that period had expanded to a level far in excess of a normal periods trading so you can see theres a normal periods trading, then boom take a look at that right . Thats a sign that the sellers had exhausted themselves the volume levels, according to technicians, showed that most of the big Portfolio Managers wanted out of the stock, they had fled it by now at the same time, buyers had stepped up to meet the supply with a level of demand think of it like this. Until youve got the climax, there were so many more sellers than buyers at each level that they knocked the stock down with their own selling. As long as sellers overrun buyers with their dumping, no base can form bad time to buy. A climax is a sign that the potential sellers who have been holding on for some time are finally giving up en masse big giveup. Remember, technicians dont care why that might be the case theyre just monitoring price and volume when they see that volume gets lar larger, expands, but the stock doesnt go down, that means at last the stock has found its floor, and its time to buy. Its safe. Thats where the buyers are at last equal to the sellers in their power to determine the direction of the stock, and thats a form of equilibrium its finally upon us okay, thats the base at t that will happen when a stock takes out resistance overhead, okay to examine the possibilities of a stock that technicians dont just look at the Closing Price and the graph that price against the previous days or weeks close, they dont just say that looks good that looks bad, no. Thats not helpful because it doesnt yield a true picture of the stocks trajectory instead, technicians use a moving average to better represent the action in the stocks price movements. It takes the Closing Prices of a stock over time and adds those prices up, then divides them by the days in a particular measured period. I tend not to talk about this in off the charts, but we are doing everything tonight for example, you can measure a moving tenday average by adding up the Closing Prices, dividing the sum by ten and plotting the number on a graph. Each subsequent day you add in the new close and drop off the earliest price to get the sum of a new tenday measuring period the four technicians i checked in with for at t, they all choose to use a longerterm view they selected a 200day moving average. They noticed that though at t had seemed to have found a floor at the 21 level that the stock had repeatedly bounced off of, it kept failing, meaning couldnt get through, failing to move up above the 200day moving average that they had all plotted, that they had all done the same amount of work. Thats what they looked at that created what looked to be a ceiling. We had the ceiling, the 200day moving average theres nothing you could do they felt every time it got there, the stock was capped. Then at last, at t cracked through the ceiling of resistance, and thats the 200day moving average that was the signal. That was the signal that at last at t could generate a great trade or an investment the old roof became a new floor heres your new floor, the 200day. Every time the moving average went above the old roof, it would create the possibility of a new floor. Then the stock would come back and test that floor and it head. This patten emboldens buyers and they recognize the stock didnt break that newfound base and instead bounced off. No, it didnt go back to where that climax low was it held. Looking back at the beautiful bottoming we see here with att, it now seems like childs play, doesnt it yeah, of course it was done going down yet at that moment, it was anything but easy, because at the same time these technical analysts were saying the bottom was in and it was time to buy, the fundamental analysts were scared out of their wits not one of them was valuable to me at calling the bottom they were scared to death right here some worried about pension obligations that could cause the dividend to be slashed, something that was way, way wrong, but it scared the heck out of me. Remember how many people were in this stock for the dividend . That base, that floor gave the stock a launching pad to blast off in an almost Straight Line into the 30s, one of the biggest gains they say a stock could give you heres the bottom line, when you see this reliable pattern as att demonstrated, despite what the fundamental analysts might be saying, you need to use the discipline that the technicians give you to pull the trigger and take advantage of a fabulous buying opportunity that might otherwise be overlooked after the market takes a real shellacking. Never took it down, then way up. After the break, ill try to make you more money. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Booyah welcome back to our special technical show the next crucial theme for technicians, whether a stock is overbought and therefore ripe for a pullback or oversold, maybe ready for a bounce you determine whether a stock is overbought or oversold by charting the ratio of higher closes, also known as the relative strength index or rsi the relative strength index is a momentum oscillator that measures the momentum the stock is going and the velocity of the move we like to match the relative strength of an individual stock to something else, perhaps the relative strength of its sector or maybe that of a larger index, and we measure the price action historically were always looking for anomalies where strength stands out, because thats a sign of a pending move, perhaps a momentum switch that we wouldnt know if we had just read the research on the stock. For relative strength chart, i often turn to bob lang and tim collins, both of whom have done remarkable work on this topic and you hear about all the time. Many technicians vary the length of time over which they measure relative strength. Both lang and collins used ten days, two weeks to get a beat on the relative strength of the stocks they look at. Theyre looking for any pattern that reverses the action of the previous period because thats a sign that a breakout or a breakdown of some magnitude might be upon us they love strong relative strength situations, but they also like to time their buys after pullbacks to get that territory point. They really care about bases typically when a stock is overbought, its ripe for pullback because overbought stocks, with many buyers in supply, tend to snap back after theyve gotten too far away from their longerterm trend line the inverse can be true, too a stock can fall so far, so fast, you should expect a snapback because its technically oversold you hear me use these terms. We see these patterns constantly, theyre indicators that a change in direction is about to occur these are terrific action points, people if you were debating buying a stock after youve done your research and discover a stock is overbought, i tell you to wait for a pullback that almost always comes lang and collins have done enough chart work to know that the vast majority of stocks overshoot directions and trace back to territory or exit points hey, retracement isnt necessarily negative charting, though, is tricky. Periodically, some stocks are so strong, they break through all the ceilings of all traditional significant measurement periods, then they stay overbought, perhaps for weeks at a time, defying the historical trading patterns that have hither too trapped them within the bands of xreems oops. They define the inevitable gravitational pull of the equilibrium line and cant be contained by the ceilings that overbought conditions usually bump into and come crashing down from when you spot these highly unusual moves, you know what, you may have to strap yourself in to get a real moonshine and lets look at this one this is what i mean. This is rare, but when it happens, its big money. We saw it occur in july of 2009 as Dan Fitzpatrick pointed out to me, using a stecastica oscillator to help spot a bottom, this time in Las Vegas Sands. The sum of the stock of Las Vegas Sands, one of the larger Casino Companies with a very important business in macau, not that it mattered to the chartists, had repeatedly stalled at the 10buck level, falling every time it hit, boom, boom, boom you know, just not working, okay but when the bulls finally broke out of the corral, there was no stopping them, and the stock gained relative strength after it pushed through, instead of regrouping to recover from the overbought status. Thats a very rare pattern see this it stayed overbought, telling you good things were going to be ahead. It never retreated as you would have expected buyers wouldnt quit, despite the stock being overbought, and that is a sign the strongest kind of positive move in the book might be taking place at any given time im expecting a pullback, but no, you had that gigantic, longterm overbought this stock proceeded to go from 10 to 48 pretty much in a Straight Line with no substantive pullback to speak of an overbought condition that can stay overbought is a golden opportunity for a huge move. Look, we came right back to being overbought again remember, i like to marry the fundamentals with the charts, so im not too dependent on the pick torlz, but what was happening underneath this chart that it was able to stay overbought so long thats when the chief locust of profits for Las Vegas Sands went from being vegas to macaw, the only place in china where gambling is legal the change transformed lvs from a soso nevada Gaming Company into an International Powerhouse the charts told you about the transformation well ahead of the wall street analysts who were still dazed that we had had such a horrendous decline to begin with they werent thinking about mchale here. The chartists were thinking buyers are lurking they use volume to spot pivots we often say volume is a lie detector, telling us if a move is for real or not when there is a small move on light volume, technicians ignore it, but when theres a small move on heavy volume, the chartists drill down laserlike to see if its a precursor to Something Bigger and infinitely more tradable. Chartists are at all times looking either for accumulation on big volume, meaning that large Money Managers are beginning to accumulate stock in an aggressive way, or distribution thats a synonym for selling of a stock, and that could telegraph a big decline. They measure these moves by something called an accumulation distribution line. When the calculation of the accumulation distribution line is arcane, involving the charting of whether a stock closes higher on greater volume on any given day versus lower on low volume, again, any Brokerage House will offer you this charting on their website. I care pasionately about it because it can go against the grain of the conventional thinking about stocks. Thats why i like chartists many times. They go against the grain and many times theyre right we saw them right in monsanto in july of 2012 this is an unbelievable one that i completely got wrong thank heavens for the chart. I didnt care for this stock at the time i didnt like gmos i was kind of biased you know, tim collins saw it another way. He said the accumulation distribution line showed that while the stock had down days, they were on light vibes all the light days, you had low lines and heavy volume on the up days, a sign that more money is flowing out than into it persistent accumulation or a buying pattern versus the distribution or selling pattern convinced him that large funds were building positions to own the stock long term, not to rent it for a quick move. It turns out that what i didnt see, what i was so confused about was that monsantos stock had started to be correlated with the price of corn, which was going higher back then because of newfound demand for ethanol engendered by government price supports i was far too concerned about nearterm earnings and worries about a shortfall and wasnt thinking big picture, but the chart showed you big picture the work of collins told you not to fear. It was showing you that Something Bigger was developing than just the quarter. He was dead right. And a stock i would have kept you out of turned out to be a big winner when corn shot up, taking monsantos stock and its earnings up with it. The big boys knew the relationship with corn in monsantos business. You were able to piggyback off their research by using collins work, which isolated the real underlying strength of the stock as depicted by the accumulation distribution line. I got smoked he saw it. Bottom line, we need to look at lots of different indicators to spot big moves, indicators like accumulation distribution, overboughtoversold levels, to spot important turns that might not be visible otherwise for those stuck trying to spot changes in the fundamentals further out in time. Powerful moves can and often elude those only focused on the Underlying Companies and not the action of the stocks themselves. Lets go to dan in illinois, please dan caller cramer, booyah thank you for demystifying the market and helping us make it accessible. Well, thats what i want. Caller my question i want everybody to understand their money thats my goal how can i help caller thank you im wondering, if i start with a small position in a stock, a company i like, and the stock just keeps going up, the most it comes down is maybe 2 , 2. 5 , how can i get a more sizable stake in that stock . My guess is you missed it thats one of the things, my discipline will cut off the down side, which is far more important than cutting the up side if you bought a position and it kept getting higher and you didnt get any more, well, its a trade and youve got to take it i know people dont want to hear that, but when you violate your bases and pay up, i can show you for years and years and years for my charitable trust, i have done the work, it is almost always a mistake chartists use all different types of indicators to spot big moves. That helps them stay ahead of the game and the fundamentals and now youre ahead, too. Much more mad money ahead. Head and shoulders isnt only used for preventing dandruff ill tell you how it can help you make some money. And then, are technicians in fundamentals like the sharks you wont want to miss my take on the dynamic between the two and got a question tweet me jimcramer madtweets, and i might answer your question on air stay with cramer jim cramer, youre one of my hero heroes. I look forward to your show every week night. Thank you so much for helping beginning investors like me. When you talk about the markets, i just believe that youre spot on oh, i love it thank you so much every night we watch you i have learned and earned. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley [lagale force winds,s absolute chaos out here accumulations up to 8 inches. Dont know if you can hear me, but [monica] whats he doing . [lance] can we get a shot of this cold front, right here. Winter has arrived. Whooo hahaha [vo] progress is an unstoppable force. Brace yourself for the season of audi sales event. Audi will cover your first months lease payment on select models during the season of audi sales event. Weve learned a lot tonight about the key terms of Technical Analysis now lets look at some of the individual charts that many of you find fascinating, even as some of the patterns, they almost sound silly, as if theyre mimicking letters or geometric shapes or even body parts i learn not to ignore one of the most simple but by far the most reliable patterns out there, the dreaded head and shoulders pattern house of pain my travel trust but alcoa in the 2010s took a giant bath in red ink because of the illinformed or maybe i should say early buy . I like to show you what i did wrong. You can learn from my mistakes as incorrectly become enamored in the works of alcoa to make it less dependent on metal itself and more proprietary forms of alumin aluminum, something it solidified when it announced it would split into two separate companies. Here, why dont you take a look at alcoa, okay its enjoyed a healthy run from the winter of 2010 right up until february of 2011, rising from 13, nice rise, right, up to 17 as its earnings trajectory seemed to have finally turned around not long after hitting 17, it dropped back down to 15, no reason i could discern, then it went up to 17, then up to 18 on the eve of the Quarterly Report i thought the quarter when it was announced was a fine one, beating both the top and bottom lines. Most of the time, thats all you can ask for. What worried me, though, was that after an initial positive reaction, the stock then dropped down to 16, 16 and change, on the news of that betterthanexpected quarter a few days later, oh, there we go, its back to 17 and i felt almost vindicated, right i mean, come on, now it can go back and challenge that 18 level so i went and bought more. I went and bought more right there. Could i have been more wrong i dont think so, because that 17 to 15 dive represented on the chart as a point a and b, then follow the run to c, 18, back to 16, d, finally 17, e. You know what that is . Thats a perfect head and shoulders pattern yeah, just like a humans head that is it that is the most frightening pattern in the entire chart book, and alcoa had traced it out, just when i thought we were out of the woods what was happening during that period that the head and shoulders pattern flagged . Europe and china began their slowdowns so aluminum quickly came into a glut, thereby stunning the turn that they worked so hard to execute. They could not control the price of the commodity itself. Still is loom anymore kleinfeld was able to reinvent alcoa to rally well off its lows, but only after completion of the brutal head and shoulders pattern from a few years before, one that cost the trust a pretty penny. Remember, mea culpa. One thing i admire about technicians is their consisten e consistency. If a head and shoulders pattern signals trouble, an inverse one signals a real chance for glory. At the beginning of january 2013, lots of people thought the economy was taking off and investors were running for the classic food and drug stocks, the ones you dont need a strong economy, and they were headed towards the cyclicals, yeah, caterpill caterpillar, united technologies, you know the kind of rotation, that kind is usually the death now for stocks that typically go higher only when the economys slowing. However, tim collins on an off the charts segment said you know what, jim, you ought to take a hard look at pfizer, because its stock was tracing out a reverse head and shoulders pattern. The Worlds Largest Pharmaceutical Company would be precisely the type of company i would shun i would normally never touch this thing when the economys speeding up, but if you look at this chart, you can see that pfizer traced out a Left Shoulder as it rallied through the month of october, and then started declining aggressively, okay, in november. The stock bottomed to form the head then in december it caught a rally, and then a pullback to create the right shoulder. The key with this pattern is the neckline, the line that connects the head to the two shoulders. When a stock breaks out above that line, it tells the technician that you are about to witness a big, big, big move pfizers neck line was at 25. 80 and collins predicted if it could take out that neck line, it could be in for a monster run. Given that money was pouring out of staples and drug stocks headed for industrials, i was confounded by this pattern i didnt trust it one bit. I mean, come on, im the king of rotations i knew it was a bad stock, but collins said rotations, smotations, you ought to close your eyes and buy the stock because Something Big was going on to buck the markets trends i think it was inconceivable sure enough, he was right, i was wrong. The stock almost instantly jumped more than 10 after collins told me to buy it with both hands what caused the move soon after collins flagged this bullish reverse, right here, the reverse head and shoulders pattern, the huge Drug Companies tried to spin off its Animal Health division. It was a shocker into a new and publicly traded company in a move that ultimately created 15 billion in value who knew the chart did. Heres the bottom line patterns matter. When you see head and shoulders pattern, no matter how confident you might be in a situation, dont take any chances sell, sell, sell at least some of it, please. And when you see a reverse head and shoulders developing, even if it makes no sense when it comes to which stock it is happening to, youve got to consider buying some thats how powerful these moves are, and the chart work on these patterns is vindicated far more often that be the skeptics would ever think possible. Stay with cramer my experience with usaa has been excellent. They always refer to me as master sergeant. They really appreciate the military family, and it really shows. Weve got auto insurance, homeowners insurance. Had an accident with a vehicle, i actually called usaa before we called the police. Usaa was there handson very quick very prompt. I feel like were being handled as people that actually have a genuine need. Were the webber family and we are usaa members for life. Usaa, get your insurance quote today. [hawaiian music playing] weve run the gamete of Technical Trading tonight on this special show, including some of the basic patterns like the head and shoulders and reverse head and shoulders setups that often show patterns of up and down moves, but those arent the only patterns that we can rely on to tell us the truth when fundamentals gives us little insight into the direction of stocks. One chart type weve come to love on mad money is called the cup and handle pattern weve seen it so often, its been so reliable, ive used it to keep myself in stocks that i might have been turned off or shaken out by. Take dominos we got behind the franchiser when it was down around 10 bucks and were feeling pretty darn greedy in the 30s. Next thing you know, it exhibited some dubious sideways action and began to drift down on no new news i hate these kinds of situations because im paranoid enough to believe something might be happening and i dont know about it and other guys do when analysts are iffy and split, as was the case with dominos in the 30s and the company isnt talking, thats when the technicians are most needed so ed poncy, one of our favorite chartists from baracheta capital, i asked for his help to define if a dominos moment had now come and gone. Take a look. Heres what he sent us at the time when we reached out to him, the stock at dominos had just begun to drift back up and you know what, we would have told you to sell, right . We thought the thrill, what might have been going here, maybe we should ring the register, take big gains for our viewers, so testimonying right there. Uhuh in fact, poncey told us to do the opposite that advance back up was the sign he needed that all was well and you had to load the boat up with dominos stock he said it was a special moment and he was anxious to show us why. You see, with that return back up to say 36, okay, dominos was tracing out a perfect cup and handle formation thats right a pattern we have found to be as reliable as the head and shoulders in its predictability, a total launching pad for a much bigger move. You caught the beginning of the cup at 36 bucks, then a general slope down to 28, where the base of the cup was and i was nervous there. He said not to be. The stock climbed back to 36 for the right side of the cup and then we got a 37, and that would be the beginning of a handle that almost always signals a much higher move handle always goes like that very reliable. Sure enough, poncys work nailed it dominos received a double and then some as the earnings turned out to be accelerating it turned out that the stock was simply consolidating, was ready to power higher on the next big move this was positive action dominos, right there, what they were doing, they were embracing technology, the web and the cell phone, facebook. Eliminate ordertakers, let customers place orders directly via the net. We would have left a minimum of a double on the table if not for poncys guidance i had to go back to poncy when i was concerned about monster beverage i thought it had run out of room, couldnt go higher near the end of 2011. I needed a chartist to give me the skinny because i kept hearing red bull performance was crimping monster and there was a possibility of regulation of the energy drink business, always deadly ed set me straight he said that for months, the stock of monster had been bouncing off its 100day moving average, okay . The blue line, you can see every time it looked like it was going down, right it rebounded look at this rebound, rebound, rebound, rebound he said monster was tracing out a series of triangles, also known as flag patterns, where you get a flat ceiling of resistance and an upward sloping floor. See that boom, boom, triangle, triangle when the stock hits the new line of resistance, it punches right through. He said any time you get these pennant formations, shortterm consolidations, preludz to a continuation pattern, you do not have to worry about a stock running on empty as a matter of fact, you ought to buy this thing both hands every time stock at 49, proceeded to jump to 79, confounding the nay sayers, including short sellers who may have been less negative if they knew or cared about this pattern. They were just worried about the government intervening monster ultimately tied up with cocacola in a deal that rocked the world, showed you that Energy Drinks are here to stay once again, i would have been shaken out of this stocks move if it werent for poncy and his chart hand holding there are lots of variations of these triangle and pennant formations for instance, look at this chart. Collins identified this one. Big move up. Citigroup. Everybody hated it in june 2010, where the lows just kept getting higher but the highs stayed the same he loved this right here this is whats known as a wedge pattern. Collins finds it as reliable in the pennant and the triangle patterns that poncy believes in. Weve also had tremendous success following carolyn baronin, the fibonacci queen the mathematician whose work i often talk about she uses patterns found in nature, fibonacci atterns. And we use data from the commodities Trading Commission to examine when hedge funds are leaning the wrong way on a commodity and we have to veer in a different direction for success. The bottom line, technicians and fundamentalists can coexist. Make peace with them both, and ill bet you will make a heck of a lot more money than if you were blind to one or the other, and certainly to both. Mad moneys back after the break. siren wailing barry murrey when you have a really traumatic injury, we have a short amount of time to get our patient to the hospital with good results. We call that the golden hour. Evaluating patients remotely is where i think we have a potential to make a difference. barry murrey we would save a lot of lives if we could bring the doctor to the patient. Verizon is racing to build the first and most powerful 5g network that will enable things like precision robotic surgery from thousands of miles away. As we get faster wireless connections, itll be possible to be able to operate on a patient in a way that was just not possible before. When i move my hand, the robot on the other side will mimic the movement, with almost no delay. Who knew a scalpel could work thousands of miles away . Hey, cramerica in charts, youre looking for trends, finding big moves and the meaning behind them. On twitter, whats trending can also tell you a lot. Madmoneytweets, anyone . Today im counting down some of your top tweets to see whats trending first up, we have a feelgood tweet from dthompson. Thank you for the good advice thanks for your book and hard work saving and investing. I retired at the age of 55. You know what, i want you to continue to own a lot of stocks. Youre not going to get a lot of income from other activities, from other bonds, and stocks compound you get that dividend. Keep reinvesting here srctalent tweets my 19yearold son wants to start saving for retirement. Do you have any advice keep up the great work. Unfortunately, its boring, start with an S P Index Fund with low fees. Im not going to recommend any particular one, but once theyve put 10,000 aside, then they can focus on individual stocks thems the rules im not varying. Next, a shoutout from a tough one, dont let the haters get to you, jim. Keep doing what you do, stay above their pettiness. 134 sometimes i get feisty, but i have this little zone here its all nfl you come into my box, youll have to be tackled im not looking the other way. Next up, villamarinj writes you want to max out at a 401 k , okay to invest . Again, this show is incorrectly known as some sort of trading show where we dont like index funds. Were an invesing show where we demand you be in index funds sorry for the misinterpretation by you last but not least, excited to have found the jimcramer show at a young age the guy is a genius with a load of valuable information for free i only wish my parents were alive because then they could tell you, told you, jimmy stay with cramer all right, i like to say theres always a bull market somewhere. I promise were going to find it just for you here on mad money. Im jim cramer and i will see you next time caller jim cramer, youre one of my heroes. Caller i look forward to your show every week night. Caller thank you so much for helping beginning investors like me. When you talk about the market, i just believe that youre spot on oh, i love it thank you so much every night we watch you i have learned and earned. Here, here and here. Thate and it even lets you take a timeout. Nooooooo yes amazing speed, coverage and control. All with an xfi gateway. Welcome to the shark tank, where entrepreneurs seeking an investment will face these sharks. If they hear a great idea, theyll invest their own money or fight each other for a deal. This is shark tank. Are darryl and randy lenz with a product to help ease the stress of traveling with children. Come on, honey. darryl come on. Come on, honey. Hi, sharks. My name is darryl