>> it was juno, j-u-n-o. the movie was lousy. >> you like the stock? >> i like the stock. i still like the stock. back to you. >> i'm melissa lee. thank you so much for my mission is simple to make you money. i'm here to level the playing field for all investors. i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramer america. i'm just trying to make some money. my job is not just to entertain you but to educate you. close watchers of "mad money" know i do play one on tv weekly.

given that i base all of my work based on fundamental factors on not the shape of the charts. i know from your feedback on twitter, that you're interested in this analysis. and it's proven time and time again to really get people involved at the right level. now not for a minute where i explain in get rich carefully, do i explain -- i overlay them on my broader world view at the moment. they don't even care what the company does. i wonder if they could do their jobs with the company's names blacked out. in fact, i am sure they could. for fear it would bias them against the stock's chart. could you imagine?

i've become pretty proficient at charting over the years, but i still rely on the professional work of technicians. that's why tonight i am picking the best of the best charts of some of the best technicians we have worked with, exploring the partners to the point where i'm pretty aastonished how accurate they can be. so i guess you've got to call me a long-term believer. they contain hundreds of charts. i match those charts with partners i have learned over time. they often become segments on the show that you see later in the week. why do the charts work? people always want to know. first, you must consider them as if they're footprints at the scene of the crime. 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, there's a remarkable self-fulfilling nach of charting stocks. so many of these professionals take them to heart that they will simply ignore stocks and go to chart stocks of the past. don't i know it. shield look at charts each morning, seeking ones with potential break outs and break downs and look at potential partners to get a handle on what really might be going on. we got some of our best ideas from some of those chart brainstorming sessions to produce excellent short and long-term results.

it starts with what are also known as internals, patterns about stocks in the aggregate that gives you clues. the systemic risk i talked about, there has been tremendous skepticism of stocks. i know each rally creates a worrisome set of risks. you may lose money either way. sell, sell, sell. but technical analysis involves the overall market. also given the s&p stock features. sometimes it puts together individual companies and charts of bigger averages that

elucidate and eliminate conclusions about true market strength. they're looking for what is called as confirmation. 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 due high, that won't be -- unless the dow jones transportation also hits a high. the dow jones transportation index is a track of congress. i often tell you the move is legitimate and can be trusted. it is real. this is some of the most technical work. you often hear at the top of the show that i like how calvin

transports are acting. the housing index are important to me, and the rth, that's that all important etf that inkauchlss the retailers. i like to see all of these move up in sync before i truly bless the market for you. oh, boy but is the inverse true. if we get a move up without confirmation from these indices, the whole rally could be a fake outand can't be trusted. the classic example if you backed to move up to record highs before the record recession, you will notice something incredibly. you will notice there was almost no participation between the financials, the retailers and the techs. what are the other internals i

look at? i analyze the advances and decleans, figure out where the rallies do concentrate. i like a market with good breadth. i also look at the new high, nee low ratio. remember, it isn't easy to get on that new high list. they have to be aligned to make some stocks successful enough to get on that new list. that high list is rarefied territory. you run the gauntlet, you have have a good stock. and if there are a lot of stocks in the new high list for many different industries, that's actually a terrific stock. you may not be a technician, but you need to know what the charts are saying and need to be able to read the itternals to verify a real move or a phony one. stay tuned.

jim in michigan. jim. >> hi, how are you and thanks for taking my call. >> thrilled you called. what's up? >> i got a question for you. in this segment you're talking about secular stocks. could you define for me once again what are secular stocks and maybe give me an example or two? >> certainly. and this is an important issue because it's a term that gets thrown around. secular means it's something that doesn't mean the gross domestic product of the world to increase in order to beat the numbers. some on the classic secular stocks would be some of the bio techs, some of the retailers that have terrific growth. gary in california. >> mr. cramer, boo-ya to you.

if you're accumulating dividends on a number of stocks as you suggest, is it better to reinvest them on a down market or to take the money as cash and then possibly reinvest that in other opportunities? >> well, see we don't know when a down face is going to end. and we know the power of compounding is an uh-uh mazing thing. i know it sounds pretty pedestrian, but we're always going to opt through investing because fortunes have been made through compounding. fundamentals are key, but technicals matter, too. today i'm bringing you into mastermind charter so you can see the whole picture of how stocks move. what technical tool can help you detect floors and creelings, i'm revealing. and then how can you tell if a

company is overripe for pull back or oversold. i'm highlighting the partners when it comes to investing. so why don't you stick with cramer? >> don't miss a second of "mad money." tweet cramer, #madtweets. send jim an e-mail to cnbcmadmoney.com. miss something, head to the website. these days families want to be connected 24/7.

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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. now, let's augment something with spotting bottoms for entry points, examining creelings 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 know a pretty simple concept, but how often do you do solid fundamental work on a company, when you try to figure out if it's the right decision to pull the trigger pause your homework is finished and you're buying oblivious to the stock? maybe it's not the right moment. after the homework i've done, i now say you're being short

segmented after you've done that homework. in fact, i would consider looking at the chart or stock you like as part of the homework. get that in your head. get it ingrained in your thinking. sometimes spotting bottoms after a long decline can be lucrative. let's go back to 2009. idea already heard the great mark canes make his bottom call based on his feeling. he was saying we are at a generational bottom. but i was still skitch about picking any individual stock to recommend to you. so i was looking to a situation to see if i was as foolproof i could find. i came up with at&t, the phone company. it had so much going for it. it included a smashing rollout

of the apple iphone, had an outsized dividend, the yield was about much higher than any stock in the dow. the dividend was cashing on this flow. i did my research, thought it was time to buy. no, no, check the chart. in dicy moments like these, it's best to check with the charter. so i did. i actually put in four chartists. amazingly ethey agreed to tee it was a strong foundation. take a look at what attracted them. take a look otthis chart. first, all technicians thought at&t had established what is called a climax low.

you can see the big lift, big lift in stock. well, i don't want to give away the story. that's where lots of sellers capitulated, but buyers had started to step up to create a base. see the extended base? they arrived at judgment by looking at the volume of where the transactions during that period had expanded during normal periods trading. so you can see. that's a sign the sellers had exhausted themselves. the volume levels, according to technicians, showed that big ones had flooded out of the stock. think of it like this. until you got the climax, there were so many sellers and buyers at each level, they knocked the stock down. as long as sellers overown buyers with their dumping -- and

they're finally giving up on mass. remember, technicians don't care why that might be the case. they're just monitoring case and volume. that's where the buyers are at last keekual to the sellers and that's a form of equilibrium. it's finally upon us. that's going to happen when a stock takes out resistance over head, okay? to examine the possibilities of a stock the technicians don't just look at the closing price and say that looks good, that looks bad. no, that's not helpful because it doesn't yield a true picture of the stock's trajectary. instead they look at a moving average. it's formed by taking the

closing prices of a stock over a period of time and then adding those prices up and then dividing them over particular period. i'm breaking it down. for example, you can measure a ten day period by adding up the sum and dividing by ten and plotting on a graph. you drop up the earliest price to get the sum of the new ten day measured period. the four techditions i used for at&t, they selected a 200 day average. they found that even if it floored, if the stock had repeated off of, it kept failing to move up above the 200 day moving average. they'd all done the same amount of work, and that's what they looked at. and that created what looked to be a ceiling. there's nothing you can do. they just felt aev time you got

there, the stock was capped. then at last the stock crashed through the ceiling of resistance. that was the signal that at&t could generate a great trade or an investment. the old roof became a new floor. here's your new floor on the 200 day. then the stock would come back and test that floor, and held this partner as they recognized the stock didn't break that newfound base. it didn't go back to where that climax low was. it held. looking at that beautiful bottoming that we see here with at&t, it now seems like child's plays doesn't it? yet at that time it was anything but easy. at the same time these feckical analysts were saying it was time to buy, but the fundamental analysts, they were scared to death right here.

some were scared the dividend would be slashed, something that was way, way wrong. that stock gave a launching pad for it to blast off. despite what the fundamental analysis might be saying, you have to take a look at the bigger picture. way up. after the break, i'll try to make you more money. looking for balance in your digestive system?

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welcome back to our special technical show. the next crucial theme for technicians whether stocks are over ripe and great for pull back or over bought. you determine it by determining a ratio of higher closes. the relative strength index is an oscillator that measures where the stock is going. we like to measure to perhaps the relevant strength of its sector or perhaps the index.

we always look for anomalies where strength stands out. for relative strength chart, i often turn to bop lang and tim collins, both of which who have done major work on the stock and you hear on the show. collins uses ten days, ten beats. they're looking at any pattern that reverses the action of the previous period. they love strong relative strength situations. but they also like to time their buys after pull backs, get that better entrypoint. they really care about bases. typically when a stock gets overbought, it is ripe for pull back because over bought stocks, ones with many suppliers, tend to snap back if they get too far away from their longer-term trend line.

you hear me use these term. we see these patterns constantly. they're a reliable indicator these changes in direction are about to occur. if you find the stock is over bought, i usually tell you to wait for a pull back. that almost always comes. that's because ryan collins has done chart work to overshoot directions, and we trace some of those moves back to better entry or exit points. charting, though, is tricky. peer oddically some stocks are so strong, they break through all the creelings of traditional measurement periods and they stay over bought perhaps through weeks at a time. they defy the notion of the gravitational pull of the old equilibrium line. when you spot these highly

unusual moves, you know what, you may have to strap yourself in to get a real moon shot. and let's take a look at this one. this is what i mean. this is rare, but when it happens, it's big money. we saw it occur in 2009 as fits patrick pointed out to be using a -- oscillator. the summer the stock of las vegas sands, not that it mattered to the chartists, had repeatedly stalled at the $10 level, falling every time it hit. just not working. but when the bulls finally broke out of the crowd, there was no stopping them. and it gained with the strength. that's a very rare pattern. see this thing? it just stayed over bought, 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 was being overbought. and that is a sign the strongest move in the book might be taking place. at any time you might be expecting a pull back, but, no, cruyou had that dramatic over book. this stock proceeded to go from $10 to $88 pretty much in a straight line. it came right back to being over bought again. remember, i like to marry fundamentals with the chart. what was happening underneath this chart? you know what was going on right then, that was when the chief locusts for profits for vegas sands went from being vegas to mccal, it transformed into a so-so international company to a powerhouse. they weren'ting thinking about

mccal here. the chartists were thinking there's buyers lurking. they use that to spot pivots. we saurch say that volume is allie detector, telling us if a move is real or not. when there's a small move on white volume, technicians ignore it. when there's a small move on heavyvule yum, that means there's a precursor. distribution, that's a synonym for selling of a stock. they measure these moves by something called an accumulation distribution line. when a calculation is arcane involving the -- i know it is -- charting whether a stock closes higher on any given day versus lower on low volume, i care passionately about it. it can go against the

conventional think of a chart. and that's what i love about a stock. sometimes they're right. we saw them being right in mon santo. this is one i got completely wrong. i didn't care for the stock at the time. tim collins saw it another way. he said the accumulation distribution line, so while the stock had down days -- that's a sure sign money was flowing into the stock and not out of it. persist tpt accumulation or buying pattern versus the zribz or selling pattern, conviction that they were building the stock long-term. it turns out that what i didn't see, what i was so confused about was that monsanto stock

had started to be correlated with the price of corn. i was far too concerned about near-term earnings and worries about a shortfall and wasn't thinking big picture. but the chart showed you big picture. the work of collins told you not to fear. it was showing you something bigger was developing in just a quarter. and he was dead right. and the stock turned out to be a big winner when corn shot up taking monsanto stock taging their earnings up with it. by using collins work, it isolated the real strength of the stock as depicted by the distribution line. i got smoked. he saw it. bottom line, we need to look at different indicators to spot different moves, to spot important terms that might not be visible otherwise. powerful moves can often allude

those who are only focus odthen underlying companies and not the stock themselves. let's go to dan in colorado. >> cramer, thank you for helping make the market assessable. >> well, i want everybody to understand the market. that's my goal. how can i help you? >> i'm wondering if i start with a small position in a stock company i like, and can the stock keeps going up, the most it comes down is at 2 maybe 2.5%, how can i get -- >> if you bought a position in a stock and it kept going on, and you didn't get anymore, well, it's a trade and you got to take it. i know people don't want to hear that. but when you violate your basis and pay up, i can show you for

years and years, it is almost always a mistake. chartists use all indicators to spot the big moves. much more "mad money" ahead. head and shoelters isn't only used for preventing dandruff. i'm telling you how to use it to make some money. you're not going to miss my make on the dynamic between the two. and i'm taking your tweets. go ahead and tweet me, and i might answer your question on-air. stay with cramer. think again.

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we've learned a lot tonight about the key terms of technical analysis. now let's look at some of the individual charts many of you find fascinating even as some of the patterns they almost sound silly, as if thoish mimicking letters or geometric shapes or even body parts. i learned to ignore some of the most simple and reliable patterns out there, the dreaded head and shoulders pattern. could i really say early buy. i like to show you what i did wrong. you can learn from my mistakes. something it solidifiedified when it announced it would split

into two separate companies. rising from $13, nice rise, right, up to $17 as its earnings trajectory had finally turned around. not long after it went to $17 it took a quick dive back to $15. and then quickly reversed and went up to $17 and then went up to $18 on the eve of the quarterly report. i thought it was a fine line, beating both the top and bottom line. what worried me, though, after initial positive reaction the stock then dropped down to $16 and change. few days later, there we go, it's back to $17 and i felt almost vindicated. so i went and bought more. i went and bought more right the. well, could i have been more

wrong? i don't think so because that $17 to $15 dive represented on the chart as point a and b and then follow the run to c, $18, back to $16, d, and then $17, e. you know what that is? that's a perfect head and shoulders pattern. that is it. that's the most frightening pattern in the entire chart book just when i thought we were out of the woods. what was happening during that period? europe and china began their slow down so aluminum quickly became the gut. over the course of the next few years, rally well-off its lows but that came only after the completion of the brutal head and shoulders pattern.

one of the things i -- 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 don't really need a strong economy. the kind of rotation, that kind is usually the death knell for stocks to typically go higher only when the economy is slowing. however, tim collins on an off the chart segment said, jim, you've got to take a look at fiser. i would never touch this thing when the economy is speeding up. but if you take a look at this chart, you can see that it traced uta left shoulder and started climbing in nchb to form

a head and then in december caught a rally 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 the stock breaks out above that line it tells the technician you're about to witness a big, big move. phizes column was $28.98. i didn't trusted it one bit. i'm like king of rotaegzs. i knew it was a bag stock. but collins said rotations -- i thought it was inconceivable. sure enough, he was right, i was wrong. the stock almoststantly jumped more than 10% after collins told

me to buy the move. as soon as it reversed the head and shoulders pattern, it spined off into the new health division, it was a shocker in a move that ultimately created $15 billion in value. who knew? the chart did. here's the bottom line, patterns pattern. don't take any chances, sell, sell, sell stlooes some of it pleasech and when you see reverse head and shoulders developing, even if it makes no sense, you got to consider buying some. that's how powerful these moves are. and the chart work on these two patterns are vindicated far more often that the skeptics would ever think possible. stay with cramer.

we run the gamut of technical trading tonight on this special show, thecluding the basic patterns like the head and shoulders and reverse head and shoulders. but those patterns aren't the only chart patterns that can be relied onto tell us the truth when the fundamentals give us little insight into the direction of stocks. when chart type that we've come to love on "mad money" is -- take the stock of dominos.

we were pretty darn greedy when it traded all the way up to $30. and then it had some sideways action. i hate these situations of no news because i'm always paranoid something might be happening and i don't know about it, but the analysts do. so with paunsy, one of our absolutely favorite charts we asked for his help it to know if the dominos moment had come and gone. take a look. when we reached out to him the stock had started to trickle back up. we felt the thrill of what was going on here, so tempting right here. in fact, paunsy told us to do

the opposite. you had to load the boat up with dominos stock. he said it was very special moment. he was ang shgs to show us why. dominos was tracing a perfect cup and handle formation. that's right. a pattern we have found as reliable as the head and soldards in its predictability, a total launching pad from the much bigger move. you caught the general cup with a general slope down to where the base of the cup was. and i was nervous right there. he told me not to be. the stock went to 36 and then we got a sideline to $37, $38 and that would be the beginning of a handle that lmsz always signals a much higher move. it almost always goes like that. very reliable. it turned out that the stock was simply consolidating.

it was ready to power higher on the next big move. this was positive action. dominos right there, they were embracing technology, the web and cellphone, facebook. we would have left that minimum of a double on the table if it weren't for paunsy's guides. when i was concerned about another one of my favorite stocks, monster beverage, thought they'd run out of room, couldn't go any higher in 2011. i heard there was this distinct possibility of regulatory intervention in the energy drinking business. check it out. he said the stock had been bouncing back on the 100 day average. every time it looked like it was going down, it rebounded. look at this, rebound, rebound, rebound. he said monster was tracing a series of triangles, also known

as flat patterns. twh the stock hit a new line of resistance, it punches right through. when you get a continuation pattern, you do not have to worry about a stock running on empty. as a matter of fact, you had to buy this stock on both hands every time. also concerning numerous short sellers who would have even cared about it, but they were just worrying about the government intervening. once again i would have been shaken out of this stock's move if it weren't for paunsy and his chart hand holding. there's a lot of variations of these different triangle impending formations. for instance, take a look at this chart. big move up.

citi group. he loved this right here. this is what's known as a wedge pattern. we also had tremendous success following the works of carolyn -- the fib queen uses ratios found in nature. you've heard of fib patterns. the bottom line, technicians and fund mmtalalists can coexist. make peace with them both, i bet you'll make a heck of a whole lot more money than if you were bliepd to one or the other and certainly to both.

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hey, crameramerica.

on twitter what's trending can also tell you a lot. #madmoneytweets. first up we have a feel good tweet from @d thompson. thanks to your investing and advice i retired at the age of 55. stocks compound. you get that dividend. keep reinvesting. here he tweets -- unfortunately, it's boring as all get out. just find one with an s&p fund. once they put $10,000 aside, then they can focus on individual stocks. themes are the rules. i'm not varying. don't let the haters get to you,

jim, keep doing what you're doing. stay above their pettiness. periodically, i get a little angry and i get feisty. you come into my box, i'm not looking the other way. maxing out a 401x okay to invest, again, this show is incorrectly known as some sort of trading show where we don't like index funds. we're a trading show where we demand index funds. sorry by the misinterpretation by you. i only wish my mom and dad were still alive because then, finally, they can say hey, i

told you, jimmy. stay with cramer. bp engineeeered a fleet of 32 brand new ships with advanced technology, so we can make sure oil and gas get where they need to go safely. because safety is never being satisfied. and always working to be better.

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my mouth feels so clean. i'll only use an oral-b! the #1 brand used by dentists worldwide. oral-b. brush like a pro. all right, i like to say there's always more homework in summer. 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.

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