oln. >> dan? >> dollar up, oil down, xop, i'm going to sell it. >> guy? >> kenross gold will get you done. >> i'm melissa lee. see you back here tomorrow at 5:00 for more "fast." "mad money" starts right now. my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now! hey, i'm cramer. welcome to "mad money." welcome to cramerica. my job is not just to entertain you but to educate you. call me at 1-800-743-cnbc or tweet me@jimcramer. i show you technical patterns that can predict the next big

move for stocks. the off the charts segment is heretical to my stock-picking methods, but i know from your feedback that you are interested in this analysis and it's proven itself team and team again to get a lot of people involved at the right level, say. now not for a minute as i explain in "get rich carefully" where i devote a whole chapter to charting, i over lay on my broader view. they don't care what the company does. i wonder if they could do the jobs with the company's names blacked out. i'm sure some of them could. now i have become pretty

proficient at charting over the years, but i still rely on the overall work of technicians to learn techniques that i can teach you. that's why tonight i am picking the best of the best charts of some of the best technicians we have worked with, explaining some of the patterns that i'm astonished at how accurate they can be. i guess you have to call me a long-term believer. i have started every saturday morning reading the standard & poors charts, now in electronic distribution. and they contain hundreds of charts. and they often become segments you see later in the week. why do the charts work? people always want to know. first, you must consider them as if they are foot prints at the scene of a crime. the foot prints trace out ha big money managers might be doing with buying and selling of

dollars. large funds often know more than others, including you and me, the charts of where their money goese goes, the charts of the stocks put together clues. there's a self fulfilling nature of charting stocks. so many look at them and take them to heart that they will avoid stocks with predictably terrible charts. don't i know it. when i worked with karen cramer, she's a chartist at my old hedge fund. and then she had me research the ones with most predictable patterns to get a handle on what really might be going on. we got some of our best ideas from those brainstorming sessions. technicals and fundamentals to present results. they present not just pictures

of individual stocks but also what are known at internals, interna internals. for years now since the great recession which showed the great risk in our financial system, there has been tremendous sce skepticism. i know many of you fear that you are coming in at a level that could turn out to be let's say, too late, too high, and you will lose money either way. >> sell, sell, sell! >> good technical analysis helps you determine the overall direction of the market, moreover that so many stocks are influenced by the tug of the s&p stock futures. it puts together the bigger

companies and creates comparisons. they're looking for 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. let's say the dow jones hits a new high. that will not be sustainable unless the dow jones transportation index hits a high or confirms the break down of the dow itself. it is a measure of commerce, tracking trains, planes, trucks, that's really, isn't 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, the founder and first editor of the wall street journal who created the wall street theory. i like how the transports are acting, that's because i'm

trying to see if it has moving power. the housing index, i look at the semi-conductor stocks and the rth, that's that all important etf that encompasses big retailers. i like to see them all move up in synch. if we get a move, a move up without confirmation from the majority of these indeces, the whole rally could be a fakeout. >> boo! >> and can't be trusted. the classic example. if you go up to move to record highs before the great recession, you won't notice something pretty incredible if you go back and study it. you will notice there was almost no participation among the financials, retailers or the techs. technical analysis got you out of that market before it was too late if you followed those indicators. did much better than the

fundamentals. i analyze the advances in declines, figure out whether the rally's too concentrated. i like a market with good breadth. i look at the high and low ratio. second, the sector's got to be strong. third, harmer forces, the federal reserve, interest rates, geopolitical tensions, have to be aligned to get on that malaysia. that high list is rarefied territory. you run the gauntlet, you have a good stock. any pull back that's market related, not substantive to the stock. if there are a lot of stocks on the high list, that's a terrific sign. so here's bottom line. you hmay not be a technician, bt you need to know what the charts are saying and how to verify the internals to know a phony move from a real move. this affects everything we do around here, not just on the off the charts 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. what's up? >> caller: i've got a question for you. in the segment, you were talking about secular stocks. could you define for me once again, what is secular stocks and give me an example or two >> certainly. secular means a secular growth stock means it does not need the gross domestic product of the world to increase in order to beat the numbers. some of the classic secular grower stocks would be biotechs, some of the retailers that have terrific growth. gary in california. gary. >> caller: mr. cramer, boo-yah to you. >> boo-yah, gary. >> caller: my question is regarding dividends in a down

market, sir. if you're 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 don't know when a down phase is going to end. and we know the power of compounding is an amazing thing, so we're going to stick always on the show, i know it sounds pretty pedestrian, but we're always going to opt in favor of reinvestment, because fortunes have made with the power of compounding. i've got to go with that regardless of the near-term consequences. fundamentals? oh, they're key. but technicals matter too. i'm going to bring you into the world of mastermind charters so you can see the history of moves. we know the chart's important, but what technical tool can help you detect floors and ceilings? i'm revealing it. how can you tell if a company is

oversold? and mixing patterns isn't only for fashion. i'm highlighting the patterns when it comes to banking and investing. so why don't you stick with cramer! don't miss a second of mad money. follow@jimcramer on twitter. tweet cramer, #madtweets. send jim an e-mail @cnbc.com. or give us a call at 1-800-743-cnbc miss something? head to "mad money" pnmadmoney.. what's better than "mad money"? how about more "mad money." follow on facebook and instagram to go one on one with cramer. get more with guests. >> how do you stay sharp? >> and go behind the scenes with

the most interactive show on television. >> if you can't explain in three bullets why you're buying a certain stock, don't buy! >> follow "mad money" today!

tonight we are offering the best of the best of technical analysis. a one-stop shop of everything you need to know to augment your investing with help of some of the best chartists in the land. spotting bottoms for best entry points and examining ceilings for the best places to exit or sell. when you pick individual stocks you're betting from the moment you buy them that they're going to go higher. i now, it's pretty simple concept, but how often do you do solid fundamental work on a company and try to figure out whether it's the right decision to pull the trigger? because your homework is finished, and then it turns out to be a terrible time and you're buying oblivious to the stock. my homework's done, let's go buy. after all the work i've done on the off the chart segments, i say you're being short-sighted. in fact, i would consider

looking at the chart or the stock you like is part of the homework. get that in your head, get it ingrained into your thinking. sometimes finding bottoms can be incredibly lucrative. let's go back to the bottom of 2009. i had the late great mark gaines. i know my friend doug caster writes at real money pro. and it had turned positive. he was saying we were in 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. and it had so much going for it. it included a smashing roll out of the apple iphone which was going to produce record profits

as at&t took profits from apple, its competitors. the yield was about higher than any stock in the dow. still, though, the stock kept plunging every time i thought it might have firm footing. in other words, i'd done my research, thought it was time to buy, no, no, check the chart! i waited, i waited for a few days. in dicey mee ey moments hiklikes best to check with the chartists. so i did. i checked with four, four chartists. they didn't care at all about the fundamentals. so take a look at what attracted them. take a look at this chart. first, all four technicians agreed that at&t had established what is known as a climax low of 21 back in the tsunami of selling that was this period, okay? and you've just got to understand that we are just at one of that's moments that was so hideous. you can see the big lift, big

lift in stock, i don't want to give away the story. that's where lots of sellers had capitulated. right here. but buyers had started to step up to create a base, see the extended base? we're floor at the stock at that level. they arrived at that judgment by hooki looking at the volume, the sum of all transactions had gone during a normal period of trading. that's a sign that the sellers had exhausted themselves. the buying levels showed that most big portfolio managers wanted out of the stock. they had fled it by now. at the same time buyers had stood up to meet the demand. at each level, they knocked the stock down with their own selling. as long as sellers overwhelm buyers, bad time to buy. those potential sellers who had

been holding on for some time are timely giving up en masse. big give up. remember, technicians don't care why that might be the case. they're just mocnitoring price and volume. when they see volume expands, but the stock doesn't go down, the floor has hit its floor, it's safe. and it's a form of equilibrium. it's finally upon us. it's going to happen when the stock takes out resistance overhead, okay. to examine the possibilities of a stock, the technicians don't just look at the closing price and the graph the price against the previous days. they don't just look and say oh, that looks good, that hooks bad, no. that's not helpful. it doesn't yield a true picture of the stock's trajectory. instead, they use what is called a moving average. a moving average is reached by

taking the movement, you can measure moving average by a ten year period, dividing by ten. each subsequent day you add in the new close and drop off the earliest price to get the sum of a new ten-day measuring period. the four technicians i checked in with for at&t selected a 200-moving day average. at&t had most certainly found a floor at the $21 level, if the stock had repeatedly bounced off them, it kept failing, meaning couldn't get through. failing to move up above th the 200-day moving arm average. they felt every time it got there, the stock was tapped. them at last, at&t cracked through the ceiling of

resistance, and that's the 200-day moving average. that was the signal that at&t could general rate a great trade or an investment. the old move became a new floor. here's your new floor, the 2 hyund0 00 day. and it held this pattern. emboldens buyers. it didn't go back to where that climax low was. it held. look at the beautiful bottoming that we see here with at&t. it now seems like childs play. but at that moment it was anything but easy. because at the same time the technical analysts were saying bottom was in. the fundamental analysts, they were scared out of their wits. they were scared to death right here. some were even worrying about pension obligations that could cause the dividend to be slashed. something was way, way wrong, but it scared the heck out of

them. that base, that floor behagave stock a launching pad. so here's the bottom line. when you see this kind of reliable pattern, despite what the fundamental analysts might be saying, you have to use the discipline that these 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 out, and it went way up. after the break, i'll try to make you more money.

welcome back to our special, technical show. the next crucial thing for technicians, whether a stock is overbought and ready for a pull back or maybe oversold and ready for a bounce. can you determine by higher closes also known as the relative strength index or rsi. it p measures the direction the stock is going and the strength of the move. and we measure the price action historically. we're always looking for anomalies where strength stands

out, because that's the sign of a pending move, perhaps the momentum switched that we wouldn't have known. we turn to tim collins who has done remarkable work on the topic. many technicians vary the time. collins uses shorter periods of times, two weeks, ten days, they're looking for any pattern that reverses the action of the previous period. they love strong relative strength situations, but they also like the time their buys if they're pull backs get a better entry point. they really care about bases. typically, when a stock is overbought, they have many buyers reaching to take supply, tend to snap back if they've gotten too far away from their longer-term trend line. the inverse can be true too. a stock can fall so fast, so

far. and they're reliable indicators that a change in direction is about to occur. if you are debating buying a stock after you've done all the research and find the stock is overbought, i usually tell you to wait for a pull back. it almost always comes. kcollins has done enough work. retracing isn't necessarily negative. charting, though, is tricky. periodically, some stocks are so strong they break through all the ceilings of all traditional significant measuring periods, them they stay overbought, perhaps for weeks at a time to find the historical trading patterns that are trapping them within the bounds of extremes. they define the ngravitational pull. when you spot these high lly

unusual moves you may have to strap yourself in to get a real moon shot. this is what i mean, it's rare, but when it happens, it's big money. we saw it happen in july of 2009 as dan fitzpatrick pointed out to me. the summer the stock of las vegas sands, one of the largest casino companies had stalled at the $10 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 all the strength. that's a very rare pattern. you see this thing in it just stayed overbought, which told you, good things were going to be ahead. it never retreated as you would have expected. buyers wouldn't quit, despite

the stock being overwaboughover. i expected a pull back, but no, you had that long testimorm overbought. it went from $10 to $48, pretty much in a straight line. and overbooked condition that can stay overbought is a golden opportunity for a huge move. remember, i like to marry the fundamentals with the chart, so i'm not too dependent on the pictorials. that's when the chief locust for profits of las vegas sands went from being vegas to macau. it went to an international powerhouse, it might as well have been called macau sands. they weren't thinking about

macau here. the chartists were thinking, there's buyers lurking. they used it to spot pivots. we often say volume is a lie detector, telling us whether a move is for real or not. when there's a small move on heig light volume, the technicians ignore it. chartists are at all times looking for big accumulation. or distribution. that's 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, i know it is, charting of whether a stock closes higher on greater volume or on any given day versus lower on low volume, any brokerage house will offer you the chart being on its website.

they go against the fundamentals sometimes, and sometimes they're right. we saw them being right in monsanto in july of 2012. this was an unbelievable one that i completely got wrong. thank heavens for the chart. i didn't care for the stock at the time. i didn't like gmos. i was biased. tim collins saw it a different way. he said while the stock had down days, heavy volume on the up days. that's a sure sign that more money was flowing into the stock than out of it. saw a buying pattern or selling pattern convinced them that large funds were building positions to own the stock long term, not for a quick move. it turns out that what i didn't see, what i was so confused about was that monsanto's stock had started to be correlated with the price of corn, which was going higher back then

because of newfound demand for ethanol. i was far too concerned about near-term earnings and worries about a shortfall and wasn't thinking big picture. collins told you not to fear. it was showing you that something bigger was developing in the quarter. he was dead right. and the stock i would have kept you out of would have been a big winner, when monsanto and corn shot up and taking the earnings with it. you were able to piggyback off the research by using collins' work which isolated the real underlying strength of the stock. i got smoked. he saw it. bottom line, we need to look at lots of different indicators to spot important terms that might not be visible otherwise to those of us trying to spot changes in the fundamentals.

let's go to dan in illinois. dan? >> caller: cramer, boo-yah. thank you for demystifying the market and helping us make it accessible. >> that's what i want. i want everybody to understand their money. that's their goal. how can i help? >> caller: thank you. i'm wondering if i start with a small position in a stock, a company i like, and the stock just keeps going up, the most that comes down is maybe 2 2, 2.5%, how can i get a more sizable stake. >> my discipline will cut off the down side, which is far more important than cutting off the up side, and if you bought a poogs position in a stock and it kept going higher and you didn't get anymore, it's a trade and you got to take it. 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. charters use all kinds of e indicators. much more "mad money" ahead. head and shoulders isn't always used for preventing dandruff. and jets and sharks, you're not going to want to miss my take on the dynamic between the two. and got a burning question? i'm taking your tweets. go ahead and tweet me #mad tweets. stay with cramer! you pay your car insurance

premium like clockwork. month after month. year after year. then one night, you hydroplane into a ditch. yeah... surprise... your insurance company tells you to pay up again. why pay for insurance if you have to pay even more for using it? if you have liberty mutual deductible fund™, you could pay no deduible at all. sign up to immediately lower your deductible by $100. and keep lowering it $100 an en continue to earn that $100 every year. there's no limit to how mu you can earn and this savings applies to every vehicle on your policy call to learn more. switch to liberty mutual and you could save up to $509. call libty mutual for a free quote today at see car insurance in a whole new light. liberty mutual insurance.

great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. we've learned a lot tonight about the key terms of technical analysis. now let's look at some of the individual charts that many of you find fascinating as even as some of the patterns sound silly, as if they're mimicking letters or geometric shapes or

even body parts. i learned to ignore one of the patterns, the dreaded head and shoulders pattern. >> the house of pain! >> the ill-informed or, can i just really, say maybe early buy? remember, i like to do mea culpas in the show. i like you to learn from my mistakes. something that's solidified when it announced it split into two separate companies, why don't you take a look at alcoa. it envjoyed a healthy win right up until 2011, up to 17. not long after the stock hit 17 it took a quick dive to 15.

then quickly reversed and went back to 17 and then to 18 on the eve of the quarterly report. i thought it was the top and bottom lines. most of the time, that's all you can ask for. what worried me is after initial positive reaction it dropped to 16, 16 and change. a few weeks later, there we go, it's back to 17 and i felt vindicated. so i went and bought more. i wefnt and bought more. could i have been more wrong? i don't think so, because that 17 to 15 dive represented on the chart a point a and b, then follow to c, 18, back to 16, timely, 17, e, you know what that is? that's a perfect head and shoulders pattern.

yeah, just like a human's head. 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. europe and china began their slow down. so aluminum came into glut. you can control your own company but not the price of the commodity itself. it rallied well off its lows, but it came only after the completion of the brutal head and shoulders pattern. remember, again, mea culpa. one of the things i admire about technicians is their consistency. if a head and shoulders pattern -- lots of people thought the economy was taking off and investors were running for the classic food and drug stocks, and they were headed toward the cyclicals,

caterpillar, you know. that kind of rotation is usually the death knell. however, tim collins on an off the chart segment said you know what, jim, you ought to take a hard look at pfizer. the world's largest pharmaceutical company would be the kind of company i would shun, i would normally never touch this thing when the economy's speeding up, but if you take a look at this chart, you can see that pfizer traced out a left shoulder as it rallied through the month of october, then started declining aggressively. in november, and then a pull back 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 ahead that, it indicates a big, big

move. bottom line was $25.80. given that money was pouring out of the staples and drug stocks, i was confounded by this head and shoulders pattern. i knew it was a bad stock. but collins said rotations, smotations. something big was going on. i thought 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. soon after he flagged this bullish reverse, the reverse head and shoulders pattern, the company decided to spin off its animal health division, it was a shocker, into a new company called zowetis. who knew? the chart did! here's the bottom lean.

patterns matter. and when you see reverse head and shoulders developing, even if it makes no sense when it comes to which stock it's happening to, you got to consider buying some. that's how powerful these moves are. and the chart work is vindicated far more often than the skeptics would ever think possible! stay with cramer!

♪

we run the gamut of trading tonight on the show, including some of the patterns like the head and shoulders and reverse head and shoulders. but the patterns aren't the only chart patterns that can be relied on to tell us the truth when fundamentals give us little insight in stocks. one trend we've come to love is the cup and handle pattern. we've seen it so often and it's been so reliable, i've used it to keep myself in stocks i might have been shaken up on. take the fave, dominoes. we were feeling pretty darn greedy when it traded in the 30s. next, there was sideways action. i hate these situations. i'm always paranoid enough to believe that something's happening and i don't know about

it and other guys do. so enter ed upponcy. fa take a look. when we reached out to him, the stock at dominoes had become the drip backup. we could have blessed you on sell, maybe we would have rang the register. huh-uh, he told us to do just the opposite, that little advance back up was the sign he needed that all was well. he said it was a very supposed moment. with that return back up to say, 36, okay, dominoes was tracing out a perfect cup and handle formation. that's right. a pattern we have found as reliable as the head and shoulders in predictability.

a total launching pad. and i was really nervous right there. he told me not to be. the stock then climbed back up to 36, we got right side of the cup. and then 37, 38, that would be the beginning of a handle that almost always signals a much higher move. it always goes like that, very reliable. sure enough, ponsy's work confirmed it. it turned out that the stock was consolidating. this was positive action! dominoes, right there, what they were do being, they were embracing technology, the web and the cell phone, facebook, let customers place orders directly via the net. we had a minimum of a double on the table if it weren't for poncy's guides. i was concerned about another one of my favorite stocks,

monster beverage. i needed a chartist to give me the skinny. i kept hearing that red bull competition was crimping monster, and there was the distinct possibility of regulatory intervention in the energy drink business, always deadly. they said for months the monster had been bouncing. every time it looked like it was going down, it rebounded, rebound, rebound, rebound. he said monster was facing a series of triangles. you have a flat ceiling of resistance and an upper-sloping floor. see that? when the stock hits the new line of positions it punches right through. anytime you get these short-term consolidations, you do not have to worry about a stock running on empty. as a matter of fact, you had to buy this thing with both hands. stock at 49 proceeded to jump to

79. and then short sellers may have been less negative. they were just worried about the government intervening. ultimately, monster caught up with coca-cola, and a deal that rocked the world showed that energy drippinnks are here to s. i would have got out of this had it not been for poncy and his chart hand holding. big move up. citi group. the high stayed the same. he loved this right here. this is what's known as a wedge pattern. they find it as reliable as the pennant. and we had tremendous success falling the feminazi queen. the mathematician whose work we often talk about.

we use the work of garner who uses -- we have to veer in a different direction for success. technicians can co-exist. you will make a heck of a lot more money if you were blind to one or to the other and certainly to both. "mad money's" back after the break.

hey, cramerica. we're looking at trends. what's on twitter can also tell you a lot. #mad tweets anyone? we have a feel good tweet. thank you for all the good

advice. thanks to your books and hard work and saving i retired at the age of 55. i want you to continue to own a lock lot of stocks. stocks compound. you get that dividend. keep reinvesting. here, my 19-year-old son wants to start saving for college. do you have any advice? it's boring, we're going to tart with an s&p, but once they put $0,0 $10,000 aside, then they can focus on individual stocks. next, don't let the haters get to you, jim, keep doing what you're doing. day above their pettiness. periodically, i get tired too, and i get a little angry and a little feisty, but what i like is this is my little sozone.

it's all nfl, you come into my box, you're going to be tackled. another writes, maxing out 401(k)? okay to invest? this show is incorrectly known as some trading show where we don't like index funds, we demand you be in index funds. sorry for the misinterpretation by you. another writes, the guy is a greeno genius. i only wish my mom and tad were sti -- dad were still alive. then they could say, hey, i told you, jimmy, stay with cramer. mr. cramer, absolutely love the show. my kids are in elementary school, learning so much from

you. >> boo-yah, mr. cramer. >> i know you hear this all the time, jim, but thank you, thank you, thank you so much. >> this has been my best year far and away in the market. >> i want to thank you for lookin' out for all the regular guys out here. >> great to hear your voice and know that you're there for us. only at&t hathe network, people, and partners help companies be... only at&t hathe network, lopen & secure. because no one knows & like at&t.

all right. i like to say there's always a bull market somewhere, i promise i'll find it just for you. right here on "mad money," i'm jim cramer, and i will see you next time!

>> today when it comes to motor vehicles, there are lots of rules. we're told where to drive, how fast to go. there are rules that dictate design, rules meant to keep us safe. [snores] [engine revving] but tonight... [airplane engine roaring] we turn the world upside down, and we throw the rule book out the window. my wife is gonna kill me. i'm diving headfirst into the insane world of sidecar racing. i'll get behind the wheel of a monster truck... i've done some dumb things on this show, but this is right up there. to fulfill that primal urge to flatten everything in my path. whoo-hoo! and we'll find out what we'll be driving after the apocalypse.