producers. with alum numb at $2,000 a ton >> alcoa, the long side for a move to 44 >> okay. dan. >> xhb i like playing october back to 36 bucks >> tt eshado it for don't move, because "mad money" with jim cramer 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 other people want to make friends. i'm just trying to make you some money. my job is not just to entertain but to educate and teach you so call me at 1-800-743-cnbc or tweet me @jimcramer. close watchers of "mad money" know i'm not a chartist, but i do play one on tv weekly,

showing the potential next big move on stocks the off the chart segment is anti-threat call and theoretical to my methods. but i know from your feedback that you're interested in this analysis, and it's proven itself time and time again. not for a minute as i explained in my book where i devote a whole chapter to charting have i become a chartist. i single out stocks to each about, and i overlay them on my broader world view at the moment chartists could care less about this stuff they often don't even care what the company does i wonder if they could do their jobs with the company's names blacked out. now, i've become proficient at

charting over the years, but i rely on the work of individual technicians to learn techniques that i can in turn teach you that's why tonight i'm picking the best of the best charts of some of the best technicians we have worked with, exploring the patterns reliable, to where i'm astonished how accurate they can be you know what? that's why i've started nearly every saturday morning reading the trend line daily action stock picks on paper and they contain hundreds of charts and i match those with the patterns i have learned over time with all the research available that you see available later in the week why do the charts work first, you must consider them as if they are foot prints at the scene of a crime these foot prints trace out what money managers might be doing be

doing with their buying and sellers of dollars they often know more than others, including you and me the charts of where the money goes put together clues that these big boys lead. second reason to care, there's a remarkable fulfilling nature of charting stocks. so many professionals simply avoid stocks with terrible charts and find stocks to own, stocks with charts that are showing positive moves from the past don't i know it. when i worked with karen cramer, she was looking to chart each morning, seeking the ones that stood out as potential breakouts and breakdowns and research the ones with the predictable patterns to get a handle on what might be going on. all of charting technical

analysis starts not just with individual stocks but the internals. patterns about stocks in the aggregate that give you clues of the direction of the stock market for years now, there has been tremendous skepticism about any advance of stocks. i believe the systemic risks have been reduced, but i know each rally creates a worrisome set of risks maybe a few that you're 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. >> technical analysis -- sometimes the technicians, everything hinges on putting together the charts of individual companies and the charts of bigger averages to

kr - they're looking for what is known as confirmation of a move to detect legitimacy i think confirmations are important, to the safety of a move they need to be explained closely. the most important and obvious confirmation, say the dow hits a new high historically that will not be sustainable unless the dow jones transportation index hits a high or confirms the breakout status of the dow itself. the transportation index is a measure of commerce, tracking trains, planes, truck, freight suspect that a good gauge? if the industrials and transports hit new highs, i often tell you that the move is legitimate and it can be trusted. this is some of the oldest technical work dating back to the first editor of "the wall street journal." you often hear that i like how the transports are acting.

that's because i'm trying to see if the move has staying power in order to bless it. i look at the banking index, the housing index. i look at the semi conductor index. and the rth, that's the etf that encompasses retailers. you get all these indexes rolling higher and you have to put the maximum amount of chips on the table but oh, boy, is the inverse true if we get a move up without confirmation from the majority of these in zrvedices, the whole rally could be a fake-out. 23 you go back to the highs before the great recession, 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, did much better than the

fundamentals what are the other sbheinternal look at? i look at the advances and declines i like a market with good breadth and i look at the new to high-to-low ratio. the sector has to be strong. larger forces, interest rates, geopolitical tensions, politics, have to be aligned to make some stocks successful enough to get on the list. you run the gauntlet, you have a good stock and if there are a lot of stocks on the new high list from many different industries, that's a dri terrific sign. so you may not be a technician, but you need to know what the charts are saying and how to read the internals stay tuned and we'll go ore a whole host of predictive patterns, 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? thanks for taking my call. >> of course thrilled that you called what's up? >> caller: i've got a question for you. 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 this is a certain that gets thrown around. secular means, it does not need the gdp of the world to increase 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, boo-yah to ya. >> boo-yah, gary >> caller: this is gary from

california dividends in a down market, sir. if you're accumulating dividends on a number of stocks, 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? >> 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 this show i know it sounds pretty pedestrian but we're going to opt in favor of reinvestment. i've got to go with that regardless of the near term consequences, because i'm thinking long-term for you fundamentals, oh, they're key. but technicals matter, too tonight, you can learn to see the whole picture behind a stock's moves. we know the charts are important, but what technical tool can help you detect floors and ceiling?

and how can you tell if a company is ripe for being sold i'm highlights the patterns when it comes to investing. so why don't you stick with cramer >> don't miss a second of "mad money. follow @jimcramer at twitter have a question? tweet cramer at #madtweets send jim an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc miss something head to madmoney.cnbc.com. these days families want to be connected 24/7.

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♪ snebl tonight, we're offering the best of the best of technical analysis, a one-stop shop of everything you need to augment your investing with the sellen of some of the best chartists in the land let's work on something that's been the province of the best chart work on the show, spotting bottoms and exiting ceiling. you're betting stocks are going to go higher when you buy them but how often do you do solid fundamental work on a company and then, well, it just turned out to be a terrible time and you're buying oblivion to the stock. maybe it's not the right moment. after all the work i've done, i say you're being shortsighted if you don't check out how the stock looks after you've done

all that homework. i would consider looking at the chart of the stock you like as part of the homework get that in your head. get it engrained in your thinking sometimes finding bottoms after long declines can be lucrative let's go back to the bottom of nooi 2009 i had heard the bottom call based on his innate feeling. he was saying we were in a generational bottom. but i was skittish about picking individual stocks to vend recommend. to you so i was looking for a situation, i came up with at&t, the phone company. it had so much going for it, including a smash rollout of the

apple iphone, which was going to produce record profits had an outsides dividend, with yield was much higher than just about any stock in the dow still, though, the stock kept plunging every night i thought it might have firm footing so i waited. i waited for a few days when the stock seemed to stabilize and decided the level might be right to hold. in dicey moments like these, best to check with a chartist. so i brought in four chartists amazingly they all agreed they were on a strong foundation and worth considering for an investment they didn't care about the fundamentals so look at this chart. first, all four technicians agreed that at&t established what is known as a climax low at 21 back in the tsunami of selling that was this seerd. you just have to understand that we're at one of these moments

that was so hideous. you can see the big lift in stock, and that's where lots of sellers capitulated. but buyers had started to step up to create a base. they arrived at that judgment by looking at where the volume in the sum of all the transactions had expanded to a level far in excess of normal period of trading. that's a sign the sellers exhausted themselves the volume levels showed the big portfolio managers had fled it by now at the same time buyers stepped up to meet the supply. think about it like this until you got the climax, there were so many more sellers than buyers as long bad time to buy. a climax is a sign that those

potential sellers who had been holding on are finally giving up en masse big give-up. remember, technicians don't care why that's the case. they're just monitoring price and volume when volume gets larger or expands, the stock has found its noor, floor, so it's safe to buy okay, that'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, they don't just look and say oh, that looks good, that looks bad. that doesn't yield a true picture. instead, technicians use a moving average a moving average is formed by taking the closingprices of a

stock over a period of time and adding those prices up and dividing those prices by the days in a particular measured period i'm breaking it down for example. you can measure a moving average over ten days by plotting the number on a graph. the four technicians i checked in with for at&t selected a 200 day moving average even though at&t found a floor at $21, if the stock repeatedly bounced off of that, it kept failing to move up above the 200 day moving average that created what looked to be a ceiling, the 200 day moving average. there's nothing you can do they just felt every time it got

there, the stock was capped. then at last, at&t cracked through the ceiling of resistan resistance, and that was the signal that can at&t could generate a great trade or investment the old move became a new floor. here's your new floor. every time the moving average went above the new roof,'9" creakre it creates the possibility of a new floor. it didn't go back to where that climax low was it held. looking back at the beautiful bottoming that we see here with at&t, it now seems like child's play but at that moment, it was anything but easy. they were saying the bottom was in, it's time to buy some were worrying about pension obligations that could cause the

dividend to be slashed, something that was way, way wrong. but it scared the heck out of it that base, that floor gave the stock a launching pad and almost straight lined into the 30s. so here's the bottom line. when you see this reliable pattern that at&t demonstrated, despite what the 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. after the break, i'll try to make you more money. for your heart...

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♪ welcome back to our special technical show the next crucial theme for technicians, whether a stock is overbought and ripe for a pullback, or oversold and maybe ready for a bounce you chart the ratio of higher closes to determine either the relative strength to index measures the direction of the stock and the velocity of the move perhaps the relevant strength of the sector or that of a larger

index. we're looking for anomalies where strength stands out. that's the sign of a pending move perhaps a momentum switch. i often turn to bob lang and tim collins, who have done remarkable work. many technicians vary the length of time over which they measure relevant strength. they like to use ten days, two weeks to get a bead on the relative strength of a stock they're looking for 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 pullbacks they really care about bases when a stock gets overbought, it's ripe for a pullback overbought stocks tend to snap back when they've gotten too far away from their trend line

a stock can also fall so far, so fast because it's oversold we see this constantly these are terrific action points, people if you were debating buying a stock after doing all the research, i usually tell you wait for a pullback. that almost always comes that's because they've done enough chart work to know that we trace those back to better entry points charting is tricky periodically, some stocks are strong, that they break through all the ceilings, and they stay overbought for weeks at a time, defining the historical trading patterns they defy the gravitational pull of the equilibrium line and can't be contained by the

ceiling that overbought conditions usually bump into when you spot these moves, you know what? you nave to strap yourself in to get a real moon shot this is what i mean. this is rare, but when it happens, it's big money. july of 2009, as dan fits patrick pointed out to me, the summer the stock of las vegas sands, one of the larger casino companies, had repeatedly stalled at the $10 level, falling every time it hit. just not working but when the bulls broke out of the corral, there was no stopping them. that's a very rare pattern you see this thing it just stayed overbought which told you good things were ahead. it never retreated as you would have expected.

buyers wouldn't quit and that is a sign the strongest kind of positive move in the book might be taking place at any given time, i'm expecting a pullback, but this stock went from $10 to $48, pretty much in a light strline, and this is a golden opportunity for a huge move went right back to being overbought again i like to mary the fundamentals with the charts, but what was happening underneath this chart that it stayed overbought for so long that's when the chief executive of profits for vegas, the change transformed them into an international power house. the charts told you about the transportation well ahead of the wall street analysts who were still dazed we had such a hor

men douse -- horrendous decline. volume is another key tool for the chartists. we often say volume tells us whether a move is real or not. when there's a small move on heavy volume, the chartists drill down to sew if it's a precursor to something bigger. chartists are looking for accumulation on big volume, or distribution that's the sign for selling of stock. they measure this by accumulation distribution line when the calculation to distribution line is arcane,

again, i care passionately about it charts go against the fundamental s sometimes and sometimes they're right. we saw them right in monsanto in july of 2012 i didn't care for the stock at the time i didn't like gmos i was kind of biased tim collins saw it another way he said the accumulation distribution line showed while the stock had down days, they had heavy volume collins noted it was just such a consistent buying pattern, or selling pattern, convinced him that large funds were positioned to own the stock long-term it turns out what i was so

confused about is the stock had started to be correlated with the price of corn because of new found demand by ethanol. i wasn't thinking big picture which the charts showed. the workup columns showed you not to fear, because something bigger was developing. that stock turned out to be a big winner the big boys knew the relationship with corn and monsanto's business. i got smoked he saw it. bottom line, we need to look at lots of different indicatorsto spot different moves

powerful moves can and often do elude those focused on the underlying companies dan in illinois, please, dan >> caller: cramer, boo-yah thank you for demystifying markets and helping us make it accessible >> that's what i want. i want everybody to understand their money. how can i help >> thank you if i start with a small position in a stock, a company i like, and the stock keeps going up, the most it comes down is maybe two, two and a halfer isment >> my discipline says you missed it if you bought a position in a stock that kept going higher, it's a trade and you have to take it. when you violate your basis and pay up, i can tell you for years

and years and years, i have done the work it is almost always a mistake. chartists use different indicators to spot different moves. that helpsthem stay ahead of the game and now you're ahead, too. much more on "mad money. i'm telling you how to make some money. and are -- you don't want to miss my take and i'm taking your tweets tweet me @jim cramer stay with cramer

♪

about the key terms of technical analysis now let's look at the individual charts that many of you find fascinating, even as some of the patterns almost sound silly. as if they're mimicking letters or shapes or even body parts i learn not to ignore one of the most simple patterns out there, the dreaded head and shoulders pattern. >> the house of pain >> remember, i like to do mea culpas on the show i hike for you to learn from my mistakes

take a look at alkoa it's enjoyed a healthy run for the winter of 2010 until february of 2011 rising from $13, nice rise, right? up to $17 as its earnings trajectory seemed to have turned around not long after the stock hit $17, it took a quick dive back to $15 then it quickly reversed and right back to $17. then up to $18 on the eve of the quarterly report i thought the quarter, when it was announced, was fine, beating the top and bottom lines most of the time that's all you can ask for. but after initial positive reaction, the stock dropped down to 16 and change on the news of that better than expected quarter. a few days later, it was back to $17. so i went and bought more. i bought more right there. 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, then follow the run to c, back to 16, d. finally 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 alkoa traced it out. what was happening during that period europe and china began their slowdown he could control his own company but not the price of the commodity. over the course of the next few days, it rallied well off its lows after completion of the brutal pattern from a few years before

remember again, mea culpa. if a head and shoulders signals trouble a, an inverse head and shoulders signals the opposite they were headed towards the cyclicals, you know. the kind of rotation, that kind is usually the death nell for stocks that go higher only when the economy is slowing however, tim collins said you know what? you ha you ought to take a look at pfizer the world's largest pharmaceutical company would be the kind of company that i would shun, never touch this when the economy is 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 started declining aggressively in november

the stock form hit a bottom to m the head the key with this pattern is the neckline when a stock breaks out, it tells the technician you're about to witness a big move. pfizer was at $25.80 for the neck line. and if you take out that neckline, it could be in for a monster run. i was confounded by this pattern. i didn't trust it one bit. i knew it was a bad stock. but collins said rotations smotations you have to buy the stock, because something big was going on it was inconceivable sure enough, he was right, i was wrong. the stock jumped more than 10% after collins told me to buy it.

what caused the move soon after this bullish reverse was flagged, right here, the huge drug companies decided to spin off its animal 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 when you see this pattern, don't take any chances sell sell sell, at least some of it and when you see a reverse head and shoulders developing, you have to consider buying some that's how powerful these moves are, and the chart work on these is vindicated far more often than the skeptics could think possible stay with cramer

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♪ we run the gamete of technical trading on p tonight on the show, including the basic patterns of head and shoulders and reverse patterns but those aren't the only ones that can be relied on to tell us the truth when the fundamentals give us little direction one chart type we love is this pattern. we've seen it so off and it's so reliable and i've used it to keep myself in stocks that i otherwise might have been turned off on take the stock of domino's we got behind the pizza franchise when it was $10 and were feeling greedy when it traded up to $30

then the stock began to drift back down on no news i'm always paranoid that somebody might be happening that i don't know about when the analysts are iffy and the company isn't talking, that's when the technicians are in ed poncy was asked if a domino's moment had come and gone when we reached out to the stock of domino's, it had begun to drift back up and we would have blessed it telling you to sell take the big gains for you viewers, so tempting right there. he told us to do the opposite. that little advance back up was a sign that he knew that all was

well with that return back up to say $36, domino's was tracing out a perfect cup and handle formation. that's right, a pattern that we have found more reliable than head and shoulders you caught the beginning of the cup at $36 and sloped down to $27, to the base of the cup. i was nervous right there. the stock climbed back to $36 and we got a little jump up to $37 and that is the beginning of a handle that almost always signals a much higher move handle always goes like that sure enough, domino's proceeded to double and then some. it turned out the stock was consolidating. this was positive action domino's right there, they were

embracing technology facebook, let customers place orders via the net we would have left a minimum of a double on the table if not for poncy's guidance i had to go back to poncy when i was concerned about monster beverage i needed the skinny, because i kept hearing there was a possibility of regulatory intervention in the energy drink business he said for months the stock had been bouncing off its 100 day moving average and then it rebounded. rebound, rebound, rebound. he said monsters was tracing out triangles. you see that

he said that any time you get these formations, which are just short term consolidations, you do not have to worry about a stock running on empty as a matter of fact, you have to buy it both hands. stock at $49, proceeded to jump to $79, confounding the naysayers, including numerous short sellers. they were just worried about the government and intervening once again, i would have been shaken out of this stock's move if it weren't poncy and his charts for a lot of variations for these formations, take a look at this chart a big move up. citi group, everybody hated in june of 2010 the highs stayed the same. he loved this right here this is what is known as a wedge pattern.

we've also had tremendous success following the works of carolyn. we also like to welcome carly garner, who uses data from the trading commission the bottom line, technicians and fundamentalists can co-exist make peace with them both and you'll make a lot more money than if you were blind to one or the other, and certainly to both "mad money" is back after the break.

hey, cramerica, you're looking for trends in charts on twitter, what's trending can also tell you a lot.

today, i'm counting down some of your top tweets to see what's trending first up, we have a feel-good tweet. thank you for all the good advice thanks to your books on saving and investing. i retired at the age of 55 i want you to continue to own a lot of stock you're not going to get a lot of income from other bonds. and stocks comcompound here, my 19-year-old son wants to save for retirement we're going to start with an s&p index fund not going to recommend any particular ones. once they've put $10,000 aside, then focus on individual stocks. them's the rules next, 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 a little feisty. but this is my little zones here, right? it's all nfl you come into my box, you're going to get tackled next up, you want new investors to max out 401(k)? again, this show is incorrectly known as some sort of trading show where we don't like index funds. we're an investing show where we demand you be in index funds sorry for the misinterpretation by you and last but not least, exciting to have found your show at a young age. i only wish my mom and dad were still alive, because then, finally, they could say hey, i told you, jimmy. stay with cramer

you can pick your friends and you can pick your nose, but you can't pick your friend's nose mike, in new jersey. >> caller: jim, boo-yah from smoky salmon idaho >> where's the william tell overture ♪ and that, ladies and gentlemen, is the conclusion of the --

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hey...i'm in the middle of a...a second iphone from at&t? okay! right now when you buy a new iphone 7 from at&t you'll get a second iphone 7 on us. and power both with unlimited data and live tv. we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. i like to say there's always a bull market somewhere, and i promise to find it for you right here on "mad money." i'm jim cramer, and i'll see you next time.

narrator: in this episode of "american greed"... money, greed, lack of moral values. maybe he's a sociopath. i don't know. narrator: ...bill mastro helps turn a niche hobby into a multi-million dollar criminal enterprise. grimes: he's referred to by some as the godfather of the industry. he really, on his back, brought this industry into what it was and what it is. narrator: and it isn't about kids getting baseball cards in packs of gum anymore. lichtman: any hobby, business, whatever, where money can be made, the cockroaches fly in. narrator: and like baseball itself, this industry has winners, losers...