offset some contrarian short trades this year >> gobble gobble, guy. >> happy turkey day. i'm thankful for lockheed martin, a company's stock that keeps on giving. >> we're test tes >> my mission is simple. "mad money" starts now hay i'm cramer, welcome to "mad money. welcome to cram america. other people want to make friends i'm trying to make you money. call me at 1-800-734-cnbc or tweet me @jim cramer

given that i base almost all of my work on fundamental factors related to the companies i study and got the shape of their charts, the off-the chart statement is great for my methods. i noted through your feedback on twitter you're interested in the analyst. it's time to get a lot of people involved in the level set. as i explain in get rich carefully, where i devote a whole chapter to charting, have i become a chartest myself i still single out the highlights, and i overlay them on my broader world view at the moment charters can care less about this stuff i wonder if they can do their jobs with the company name's blocked out in fact i'm sure they could some hate the fact for knowing anything at all about the company. now i've become pretty

proficient at charting over the years but i still have the individual work of technicians to demonstrate on charting that's why tonight i'm picking the best of the best charts of some of the best technicians we have worked with the point where i'm asston ished at the acting they -- that's why i've started for the last saturday morning reading the stock charts, formally on paper, now on electronic distribution and they contain hundreds of charts i've matched the charts i've mastered over the time why did the charts work? people always want to know first you must consider them as they are footprints tat the scee of a crime these footprints chases out what the management may be doing with

their dollars. large funds often know more than others including you or me the charts of where their money goes, the charts of the stocks put together clues these big boys leave second reason to care, there's a remarkable self-fulfilling nature of stocks some of these professionals take it to heart that they avoid stock and find stocks to own, stocks of the chart that are pressing positive moves of the past she would look at the charts each morning, seeking ones that begin -- and research ones with most predictable patterns to get a hand of what really may be going on a true and successful melody of the fundamentals to produce excellent, short and long-term results. all of charting technical analysis chart not only with a

picture of individual stocks, also what are known as the internals. patterns about stocks in the agate that give you clues of the stock market for years now the investment shows -- there have been tremendous skepticism about any advance of stock i believe the systemic risk has been reduced i know each rally creates a set of risks many of you fear you're coming in at a level that could turn out to be, let's say too late and too high or and you'd lose money either way more important than ever given so many stocks are influenced by the tub of the s&p 500 stock features sometimes everything hinges of putting together the charts of individual companies and the stocks of the bigger averages.

they're looking for what is known as confirmation of a move to detect its legitimatesy i think confirmations are important to the safety of a move they need to be explained closely. the most important and obvious confirmation, let's say the dow jones hits a new high. that would not be sustainable unless the dow jones transportation hits a high or performs a break out strategy in the dow itself the measure is commerce, tracking trains, brakes forward. if both the industrials and the transports hit new highs i tell you the move is legitimate and can be trusted and it is real. this is some of the oldest technical work the founder of the wall street journal who created dow theory, you often hear at the top of the show i like how the transports are acting, that's because i'm

trying to see if the move is staying power in order to bless it the bank indentation is important to me. the housing indentation, the semi conductor, the sox. and the rth. i like to see all these industries move up in sync before i truly bless a market move for you if we get a move up without confirmation for the majority of these indexes the whole rally can be a fake-out and can't be trusted. the classic example, if you go back up to the moves for record highs up to the recession, you'll notice something pretty incredible thank you go back and study. you'll know there's no participation among the financials, retellers or techs technical analysis got you out of the company before it was too late what are the other internals i

look at? i analyze the advances and declines i like a market with good breath i also look at the new high and low ratio. first the company had to be doing well, second sector's got to be strong third everything have to be aligned to make some stocks successful enough to get on that list you run the gauntlet you'll have a good stock, a stock that i'll probably want to buy on a bull back that's not related substantive to the stock so, here's the bottom line, you may not be a technician but you need to know what the charts are saying and be able to read the internals. stay tuned and we'll go over a whole host of predictive

patterns jim in michigan. >> caller: jim, hi, how are you? and thanks for taking my call. >> offense what's up. >> caller: i 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 maybe give me an example or two. >> certainly this is a very important issue because it's a term its spun around, secular means a secular growth stock is something that does not need the growth estimate product in the world to increase some of the classic secular grower stocks would be some of the biotechs, some of the retailers that have terrific growth gary in california >> caller: mr. cramer booyah to you. my question's regarding

dividends in a downmarket. if you're accumulated dividends on a number of stocks you suggest is it battery to reinvest them in a down market or take the money as cash and then possibly reinvest that in other opportunities? >> well, you see we don't know when a down face is going to end, we know the power of compounding is an amazing thing. we're going to stick always on the show, i know it sounds pretty pedestrians, but we're also going to opt in favor of reinvestment because fortunes have been made through the power of compounding i've got to go near ththat near- tonight i'll bring you into the world of master mind charting on m.a.d. tonight, the chart's important but what tool can help you detect floors and ceilings how can you tell if a

partner is over pull back. i'm highlighting the patterns on banking when it comes to investing so stick with cramer ♪

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tonight we are offering the best of the best of tech y'all analysis, a one-top shop of everything you need to know to augment your investments let's work on something that has been the province of the show. spotting bottoms and advancing ceilings for exits itself. when you're picking stocks you're betting from the moment you buy them that it can go higher 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 it's starting to be a terrible time and you're buying oblivious to the stock hey, my homework's done let's go buy. maybe it's not the best moment before you put the buy order it's not just the right time

since you've done the homework, in fact i'm consider looking the chart of the stock is like as part of the homework, get that into your head, get it ingrained if your thinking sometimes buying can be lucrative. let's go back to the bottom of 2009 i have a sense that decline velocity was lessening i already heard the bottom call. i know my friend doug cast writes with real money part pro, had actually turned pronouncely positive he was saying we were in a generational bottom. i was still skidish about picking any individual stock to recommend to you so, i was looking for a situation, seemed about as bullet proof as i can find i came up with at&t, the phone company. it had so much going for it. you go to go back in way back in

machine. had an outsized dividend 6.3 yield at that moment the dividend was safely backed at 8 the stock kept plunging every time i thought it did plum footing. my research was done and thought it was good to buy, no, check the charts in dicey moments like this it's best to check with a chartest so i did. i brought in four chartest remember they didn't care at all about the fundamentals so make a look at what attracted them, take a look at this chart. all four technicians agreed at&t had established what is known as a climax low of 21 back in the selling of this period we were at one of these moments

that were so hideous they lived in stock and then that just -- that's where lots of sellers has capitulated buyers started to step up to create a base. so you'd extend a base or floor at the stock at that level all the transactions have expanded in the normal period trading. that's a sign that the sellers had exhausted themselves the buying leveling according to technicians have fled by now buyers stepped up to meet the supply with a level of demand. until you got the climax there was so much -- as long as sellers over on buyers what they're dumping, no base can form bad time to buy

a climax decided the potential sellers who had been holding on for some time has given up on mass big give up. remember technicians don't care why that might be the case they see the buy get larger, expand and doesn't go down, that means it's time to buy, it's safe that's where the buyers are at last, equal to the power to determine the direction of the stock and that's a form of equilibrium. that's the based at&t. that's going to happen when a stock takes out resistance overhead to examine the possibility of a stock, the technicians don't just look at the closing price and graph that price at the previous close that's not helpful because it doesn't yield a true picture technicians do what is known as a moving average a moving average is formed by taking the closer prices of the stock over a period of time and

adding those prices up and dividing the prices by the days and particular measurement period for example, you can measure a moving average over a ten day period by adding up ten days with closing prices by dividing by 10, plotting the number on the graph. the four technicians i checked in with for at&t they all cheos a longer measurement they detected a four day moving average. it kept failing, meaning couldn't get through, failing to move up above the 200-day moving average. if they'd all plotted it they would have done the same amount of work. that looked to create a ceiling. a 200-day moving average, there's nothing they can do. then at last, at&t cracked

through the ceiling of resistance and that's the 200-day moving hour. that was the signal at&t could generate a great trade for an investment the old move became a new floor. every time the moving average went above the old roof it will create the possibility of a new floor. then the stock would come back and test that floor. 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 back at the beautiful bottoming that we see here with at&t, it now seems like child's play doesn't it. yeah of course it's going down at that moment it was anything by easy because at the same time these technical analysts were saying the buyings in and they were going to buy. they were all scared to death right here some are even worried about pension obligation that can cause the dividend to be slashed.

something that was way way wrong. it scared the heck out of people that base and floor gave the stock a launching path and it almost straight lined into the 30s. one of the biggest gains the safe stock can give you. when you see these kind of reliable patterns, 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 slash. after the break i'll try to make you more money

is this for me? ♪ [alarm beeps] happy? wooo! let out your inner child at the lexus december to remember sales event. experience amazing at your lexus dealer. right in the heart of the was in his financial crisis, and saw his portfolio drop by double digits. it really scared him out of the markets. his advisor ran the numbers and showed that he wouldn't be able to retire until he was 68. the client realized, "i need to get back into the markets- i need to get back on track with my plan." the financial advisor was able to work with this client. he's now on track to retire when he's 65. having someone coach you through it

is really the value of a financial advisor. welcome back to our special technical show nekt crucial thing for technicians, whether a stock is overbought and ready for a pull back you determine whether a stock is overboard or oversold by determining the ratio of higher closings the relevant strength indentation is an ice later that measures the direction the stock is going and velocity the move we'd like to measure the relevant strength of its sector and a larger index and measure the factor perhaps a momentum switch that we won't know if we just read

the research on the stock. i often turn to bob lieings or tim kol listens. many technicians bury the length of time which they measure lay of strength. they're looking for any pattern that reverses the action the previous period because that's a sign the break out or break down some magnitude might be upon us. they love strong relevant strength situations but they also like the time their buys after pull backs get that better entry point. typically when a stock gets over brought and right for a pull back, tend to snapback if they've gotten too far away from their longer term trend line the inverse can be true too. a stock can fall so far so fast you could expect a fall back because it's technically oversold we see these patterns

consistently, they're reliable indicators that it change. these are terroristic action points people. if you're debating buying the stocks after you've done the research i usually tell you to wait for a pull back that almost always comes the vast majority of stocks overshoot directions and we trace some of those moves back to better entry or exit points a retracing isn't necessarily negative charting though is tricky. some stocks are so strong they breakthrough all the ceilings of all traditional significant measurement periods and stay overbought perhaps for weeks at a time to find the historical training patterns to trap them within the bans of extreme they define the notion of gravitational pull and can't be contained by any of the various ceilings that overbought conditions bump do and come crashing down. when you spot these highly unusual moves you may have to

strap yourself in. let's take a look at this one. this is rare but when it happens its big money. we saw it occur july of 2009 as dan fitzpatrick pointed out using a -- one of the largest casino businesses had been repeatedly stalled at the $10 level, falling every time it hit, boom, boom, boom. just not working but when the bulls finally broke out of the crowd there's no stopping them. the stock gained the strength after pushing through. that's a very rare pattern, it just stayed overbought which told you good thing were going to be ahead. it never retreated as you would have expected. buyers wouldn't quit despite the stock being overbought that is the sign the strongest kind of positive move in the

book might be taken place. at any given time expecting a pull back but no this stock proceeded to go from $10 to $48, pretty much in a straight line with no pull back to speak of. an over bought condition is a golden condition for a huge move i'd like to marry the fundamentals for the charts, what was happening underneath the chart it was able to stay overbought for so long that's when the chief locus of profits from las vegas sand went from being vegas to mccall the transport l bs from a so so nevada company into an international pair house the -- they weren't thinking about mccall here, the chartest were thinking there's buyers lurking.

buyers and other key tool chartest, they use that to spot pivots we often say buy is a lie detecter telling us whether there's a move or not. when there's a small move on heavy volume the chartest build down laser like to see if there's something bigger chartest are at all time looking for accumulation on big buying meaning -- 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 calllation distribution line is -- i know it joining up where a stock closes higher any day versus lower or low volume i care passionately about it because it can go against the grin of traditional thinking of a stock. that's why i love charting so

much we saw them being right in monsanto in july of 2012 this was an unbelievable one that i got wrong thanks heavens for the stock i didn't carry for the stock at the time i was bias gmos whatever tim collins saw it another day, he said while the stock has down days they were on the -- that's a sure sign more money was flowing into the stocks than out of it. collins did a consistent accumulation long-term not to rent it for a quick move, 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, which was going higher because the

newfound -- i was far too concerned about near term earnings and worries about a shortfall and wasn't thinking big picture by the chart showed you big picture. the work of collins told you not to fear. the stock that i would have kept you out of turned out to be a big winner when corn shot up taking monsanto stock and its earnings up with it. the big boys new the relationship with corn and monsanto business. you were able to piggy back off its concern. i got smoked bottom line, we need to look at different indicators to spot big moves. powerful moves and can often do elude those who are only focused on the underlying companies and not the action of the stocks

themselves let's go to dan in illinois please dan. >> caller: cramer. booyah thank you for demystifying markets and help us make it accessible >> that's what i want. i want everybody to understand their money. how can i help >> caller: thank you i'm wondering if i start with a small position in a stock, 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 >> my discipline says you missed it it will cut off the down side which is far more important than cutting off the up side. if you bought a position that's going higher and you didn't get anymore, it's a trade and you got to take it i know people don't want to hear that i can show you for years and years it is always a mistake charters use all types of

indicators to spot big moves that helps them stay ahead of the game and fundamentals. much more "mad money" ahead. head and shoulders sntd used for just preventing dandruff you're not going to want to miss my take on dynamics i'm taking your tweets, tweet me @jim cramer, #mad tweets and i may answer your questions on air. stay with cramer

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we've learned a lot tonight about the key term of technical analysis the patterns almost sound silly as if their mickicing levels or even body parts. the reliable patterns out there, the dreaded head and shoulders pattern. that ill informed or i'd say early buy. i like to show you what i did wrong, you can learn from my mistakes something that solid fie when i announced they split into two separate companies

here, take a look at alcoa from the year of 2010 right up until february of 2011 rising from $19, up to 17, then it went down to 15 and reversed and went back to 17. went up to 18 on the eve of the quarterly report i flipped the quarter as -- most of the time that's all you can ask for. what worried me was after an initial reaction the stock dropped down to 16, 16 and chang. few days later it's back to 17 and i felt almost vindicated ready to go back and take challenge at 18 level, so i went and bought more. could i have been more wrong i don't 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 that's a perfect head and shoulders pattern. yeah, just like a human's head that is it, that's the most frightening pattern in the book. and just when i thought we were out of the woods what were happening during that period of the head and shoulders time he could control his own company but not the price of the commodity itself, still is aluminum over the next course of the few years, kline feld was able to -- that came after the completion of the brutal head and shoulders pattern. one of things i admire about

technicians is their consistency. if the head and shoulders signals a problem, the -- at the beginning of january 13, lots of people thought it was taking off. industry running for food and drug stocks. it was heading towards the cyclical rules the kind of rotation, that kind is usually the death now for stocks to go higher only when the committee's slowing. however, tim collins on an out-of-the chart segment says you know what, jim, you ought to take a look at pfizer. the world's pharmaceutical company would be the company ooud shun. i'd never touch this thing when the company's speeding up. when you're taking a look at this chart you'd see pfizer traced out left shoulder, rally through the month of october and start declining aggressively in november, the stock bottom form

ahead, and in december and a pull back to create the right shoulder the key with this pattern is the neck loan, the line that connects the head to the two shoulders. before the bottom comes out of this line it show it is technician you're about to witness a big big big move collins predicted if it could take out that neckline it can be in for a monster run i was come founded by this bullish reverse head and shoulder i knew it was a bad stock. collins said rotations show tagss. you ought to closure eye requests buy the stock because something big was going on that could make it buck the market's trends sure enough he was right, i was wrong. the stock jumped more than 10% after collins told me to buy it with both hands. soon after collins flagged this

bullish reverse, the huge drug company decided to spin off its animal health division, it was a shocker into a new and publicly trading company, a movement only created $15 billion in value who knew the chart did. patterns matter. when you see head and shoulders might be in a compromising situation don't take a chance, sell sell sell, at least some of it and when you see a reverse healed and shoulders developing, you got to consider buying some. that's how powerful these moves are. and the trial work on these two patterns have been vindicated often than the skeptics would think possible stay with cramer

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we run the gentleman mutt of technical on this special show often impressers big down and up moves. those patterns aren't the only dha chart patterns to be relied on to tell us the truth in the direction of stocks. one type we come to love on "mad money" is the cup and handle pattern. i've used it to deep myself in -- keep myself in stocks. take the stock of cramer fave, dominos. we got behind the -- feeling greedy when traded up to 30s it began to drift down with no new news i hate these situations on no new news, i'm always paranoid on

something happening and i don't know about it and the other guys do we went to ed ponce, one of our favorites at charter capital and asked for his help to provide a domino's moment now come and gone when we reached out the stock at dominos fwan to drift back up, and we would have blessed it in telling you to sell. the big gaze for our viewers so techlts right there. lebts it was a very special moment and was anxious to show us why with that return back to up say, 36, dominos was tracing at a perfect cup and handle formation. that's right, a pattern we found to be reliable for head shoulders and its predictable. you caught the beginning of the

cup at 36, then down to 28 where the base of the cup was, and i was nervous right there. the stock climbed back to 36, then we got a 37 -- a little side to 37, 38 and that would be the beginning of a handle that almost always signal a much higher move. sure enough ponce's work nailed it domino received a double and then some. it turned out the stock was simply consolidating ready to power high in the next big move. this was positive action dom foes what they were doing was embracing technology the web and cell phone, facebook, order placers. we will have left a minimum of a double on the table if it weren't for ponce's guides i need to go back to ponce when

i was concerned about one of my other stocks, monster beverage i needed the chart to give me the skinny because i kept hearing red bull was chumping monster. every time it looks like it was going down, right, it rebound. look at this, rebound rebound rebound. he said monster was tracing at a series of century angles see that, boom boom triangle when the stock hit it is new line of resistance it punches through. any time you get those formations which is short-term psychologies -- psychologicaldations which is -- stock at 49, proceeded to jump to 79.

come founding the nay sayers, they were worried about the government intervening a truly monster of a soft drink company and rocked the world energy drinks are here to stay once again, i would have been shaken out of this stock's move if it weren't for ponce and his chart handling take a look at this, big move up citigroup, everybody hated it in june 2010, lowe's kept getting higher but the highs stayed the same this is what's known as a wedge pattern. collins find it reliable and dependant. we've also had tremendous in the words of call lin, she's a queen, we cannot mention her on this show. the fib queen uses ratios found in nature. we also like the work of carlie

garner who uses data from the trading commission to examine when too many hedge fund are leading the wrong way on commodity. the bottom line, technicians and fundamentalist can coexist make peace with them both and you'll make a heck of a lot more money. if you're blind to one or the other and certainly to both. "mad money's" back after the break. ♪ ♪ what we do every night is like something out of a strange dream. except that the next morning it all makes sense.

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today i'm counting down some of your top tweets to see what's trending fist up we have a feel good tweet from @d thompson thank you jim cramer for your good advice. thank you for your books and investing. i retired at the age of 55 i want you to own a lot of stocks, you're not going to get a lot of income from other activities or bonds. keep reinvesting here @s r tweet talent tweets,

my 19-year-old son wants to keep saving -- >> find one with low fees, not going to recommend any particular one once they put $10,000 aside then they can focus on individual stocks next, @hs drippinger rider @jim cramer don't let the haters get to you jim, keep doing what you're doing. periodically i get tired, angry and feisty this is my little zone here right, it's all nfl. you come into my box, you're going to have to be tackled. i'm not looking the other way. next up. @villa marine jay writes maxing out a 401 (k) okay to invest again this show is incorrectly known as some sort of trading

show where we don't like index funds. we're investing show where we demand you be in indentation funds. sort for the misinterpretation by you @jack cram ner says excited they found at -- free i only wish my mom and dad were still alive because then finally, they could say, hey i told you jimmy. stay with cramer

is this for me? ♪ [alarm beeps] happy? wooo! let out your inner child at the lexus december to remember sales event. experience amazing at your lexus dealer.

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i'd like to say there's a bull market somewhere and i promise to find it for you here on "mad money. i'll see you next time

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