tv Mad Money CNBC June 26, 2019 6:00pm-7:00pm EDT
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days, yeah, i am listen, i missed "the halftime report" today but i did see fast money last night cop, that will get you catch fast money 5:00 p.m. easter 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 cramerica other people want to make friends, i'm just trying to make your money my job is to entertain and educate so-call me at 800-743-cnbc or tweet m me @jimcramer. i do play one on tv weekly, show you technical patterns to predict the next big move on
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stocks because i base my work on the companies i study and not the shape of the carts the off of charts is to my traditional stock picking methods but i know from your feedback @jimcramer on twitter you're interested and proven itself time and time again to get a lot of people involved at the right level, say not for a minute as i explain in get rich carefully where i devote a whole chapter to charting have i become a chartest myself? i highlight and teach after stu studying the sectors and over lay them on my broader world view at the moment charters could careless about this stuff they don't 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. some of them hate the distraction of knowing for fear would bias them against the stock's chart. can you imagine? i've become proficient at
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charting over the years but rely on the individual work of professional technicians to demonstrate how to use charting and 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 that will be reliable to the point i'm astonished how accurate they can be i guess you got to call me a long-term believer you know what? that's why i started every saturday morning for the last 340 yea30 years reading now on paper and electronic distribution and contain hundreds of charts and i match the charts with the patterns i've learned and the reserve available become often segments on the show 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 footprints at the scene of a crime these footprints trace out what big money managers might be doing with buying and selling of dollars.
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these portfolios 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 is a remarkable self-fulfilling nature of charting stocks. so many professionals look at these drawings and take them to heart they will simply avoid stocks but predictably terrible charts and find stocks to own that are positive moves of the past don't i know it? when i work with karen cramer, she's a veteran chartest at my hedge fund and she would show the break downs and breakouts to get a handle what might really be going on. we got some of the best ideas from some of those chart inspired brainstorming sessions, a true melting of the technical and fundamental to produce short and long-term results. all of charting technical analysis starts with the pictures of individual stocks
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but also what are known as the internals, internals patterns about stocks that give you clues of the direction of the entire stock market. for years since the great recession that showed the financial system and the system ma i c risk has been reduced, i know each rally creates really a worrisome set of risks many of you fear you're coming in at a level that could turn out to be too late, too high and you will lose money either way. >> sell, sell, sell. >> could technical analysis include analyzing indicators you determine the overall direction of the market? more important than ever given so many stocks are influenced by the tug of the s&p 500 feeatures everything hinges on individual companies and bigger averages to create comparisons that illuminate conclusions about
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true market strength they are looking for what is known as confirmation of a move to detect its legitimacy i think confirmations are incredibly important to the safety of a move they need to be explained closely. the most important and obvious confirmation, let's say the dow jones hit as high. historically it will not be sustainable unless the dow jones transportation index hits a high or confirms the breakout status of the dow itself. the index is a measure of commerce tracking trains, planes, truck, freight forward isn't that a good gauge? if the industrials and transp t transports hit new highs, i often tell you 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" that created the dow theory to validate rallies or defrock them you often hear i like how the transports are acting. that's because i'm trying to see if the move is staying power to
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bless it i look at a host of other indicators, the banking index is important, the housing index, the semi conductor, stocks, and the rth. that's that all important etf that encompasses big retailers i like to see them move up before i truly bless a market move for you you have to put the maximum amount of chips on the table oh, boy, but is the inverse true if we get a move, a move up without confirmation from majority of these, the whole rally could be a fakeout and can't be trusted the classic example, if you go back to the move up to record highs before the great recession, you won't notice something pretty incredible if you go back and study it you will notice that there was almost no participation among the financials, the retailers or the tax. technical analysis got you out of the market before i was too late if you follow the indicators much better than the fundamentals
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what are the other internals i look at? i analyze advances in declines and figure out whether the rally does concentrate and good breath and participation by different groups and high and low ratio. it isn't easy to get on the high list first the company has to do well and the sector has to be strong and third, larger forces, the federal reserve, politics have to be aligned to make stocks successful enough to get on the new list the high list is rare territory. you run the gauntlet with a good stuck with pull back that's market related not substantive to the stock if there are a lot of stocks for many different industries, that's a terrific sign here is the bottom line, you may not be a technician but you need to know what the charts are saying and you need to know how to read the internals to verify a real move or a phony one stay tuned and we'll go over a whole host of predictive patt n patterns that show everything we do around here not just on the off the charts
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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 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 look, this is a very important issue becausise it's a term that gets thrown around secular means a secular growth stock is something that does not need the domestic product in the world to increase for it to beat the numbers. some of the classic secular grower stocks would be some of the bioteches, some of the retailers that have terrific growth gary in california, gary >> caller: mr. cramer, boo-yah to you. >> boo-yah, gary. >> caller: gary from california. my question is dividends in a
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down market. 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 opportunitys? >> 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. we'll stick always on this show. i know it sounds pretty pedestrian but we're always going to opt in favor of reinvestment because fortunes have been made through the power of compounding i've got to go with that regardless of the near term consequences because i'm thinking long term for you fundamentals are key but technicals matter, too tonight i'm bringing you into the mastermind charts so you can learn to see the whole picture on mad tonight, we know charts are important but what technical tool can help you detect floors and ceilings i'm revealing it how can you tell if a company
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over bought or over sold and mixing patterns isn't only for fashion. i'm highlighting the patterns worth banking on when it comes to investing so why don't you stick with cramer. >> don't miss a second of "mad money. follow @jimcramer on twitter and have a question? tweet cramer, #madtweets send jim an email to madmoney@cnbc.com or give us a call at 1-800-743-cnbc miss something head to mad money.cnbc.come
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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 with some of the best chartest in the land let's work on something that's the province of the best chart work on the show, spotting bottoms for best entry points and examining ceilings for the
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best places to exit or sell. when you pick individual stocks, you are betting from the moment you buy them that they are going to go higher i know, simple concept but how often do you do solid fund mental work on a company and try to figure if it's the right decision to pull a trigger because your homework is finished and then it's a terrible time. hey, my homework is done let's go buy maybe it's not the right moment. i say if you don't check out how the stock looks after you've done the homework but beforeordt the right time but consider looking at the chart of the stock as part of the homework. get that in your head. get it engrained into your thinking sometimes finding bottoms with mean lucrative a good example, let's go back to the bottom of 2009 i had a sense declines velocity was lessoning. i had already heard mark canes
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make his famous haynes bottom call based on his feeling. i know that my friend doug who writes with me at real money propr pro is part of the family had termed pronounced positive he said it was a generational bottom i was skiddish about picking individual stock to recommend to you. so i was looking for a situation seemed about as bulletproof as i could find i came up with at&t, the phone company. it had so much going for it. you have to go back in the machine here but included a smashing rollout of the apple iphone, which was going to produce record profits as att took business. had an outside dividend that yielded 6.2% at that moment. the yield was higher than just about any stock in the dow the dividend was back by the cash flow. still, the stock kept plunging in other words, i had done my research and thought it was time to buy no, no, check the chart. i waited i waited for a few days when the
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stock seemed to stabilize and realize the it might be right and in dicey moments like these, check with the chartest. i brought in four, four chartest they agreed with the strong foundation and definitely worth considering for an investment. they didn't care at all about the fundamentals look at this chart all four technicians agree att established a climax low at 21 back in the tsunami of selling that was this period okay just got to understand that we have just at one of these moments that was just so hideous. you can see the big lift, big lift in stock and then well, let's just -- i don't want to give away the story. that's where lots of sellers stopped here but buyers started to step up to create a base? okay see the extended base. they arrived that the judgment by looking where the volume, the sum of all the transactions during that period expanded to a
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level far in excess of normal period trading so you can see boom take a look at that. that's a sign that the sellers exhausted themselves, the volume levels according to technicians showed big portfolio managers wanted out and fled it by now. at the same time, buyers step up to meet the supply with a level of demand. think of it like this, until you got the climax, there were so many more sellers than buyers at each level they knock the stock down with their selling. as long as sellers overwhelm buyers, no case can form bad time to buy. a climax is the sign that those potential sellers who have been holding on for sometime are finally giving up on mass. big give up. remember, technicians don't care why that might be the case they are monitoring price and volume when they see volume gets larger, expands but the stock doesn't go down, that means at least the stock found it's floor so it's time to buy. it's safe. that's where the buyers are at least equal to the sellers and power to determine the direction
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of the stock and that's a form of equal librium that's advance? it takes out resistance overhead okay to examine the possibilities of a stock the technicians don't look at the closing price and the previous days or weekly close, they don't look and say that looks good and bad. that's not helpful because it doesn't yield the true picture instead technicians use a moving average. to better represent the action of stocks price movements. a moving average is formed by taking the closing prices of a stock over a period of time and adding them up and dividing them by the days for a particular measured period. i'm breaking it down you can measure moving average by adding ten days with the closing prices and dividing some by ten and plotting the number on a graft each day you add in the close and drop off the early price to get the sum of a ten-day measuring period the four technicians i checked
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in with for att choose to use a longer term. they selected a 200-day moving average. even though att found a floor at the $21 level, if the stock repeatedly bounced, it was failing to move above the 200-day moving average they plotted it and did the same amount of work that's what they looked at and created a ceiling. the 200-day moving average there is nothing you can do. they felt every time it got there the stock was capped and at least att cracked through the ceiling of resistance and that's the 200-day moving average that was the signal the signal at last att could generate a great trade or investment the roof was a floor here is your new floor every time the moving average went above the old roof it went. this pattern emboldened buyers
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as they recognize the stock didn't break the base and bounced off. it didn't go back to where that climax low was it held. looking back at the beautiful bottoming that we see here with att, it now seems like child's play, doesn't it of course it was done going down yet, at that moment it was anything but easy because at the same time analysts were saying the bottom is in and time to buy. the fundamental analysts were scared out of their whits. not one was valuable to me they were all scared to death right here some were even worrying about pension obligations that could cause the dividend to be slashed, something way, way wrong but it scared the heck out of me. remember how many people are in the stock because of the dividend it gave the stock a launching pad to blast off in an almost straight line. here is the bottom line, when you see this reliable pattern as att demonstrated despite what the analysts might be saying, you have to use the discipline these technicians give to pull
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technical show whether a stock is over bought for a pull back or over sold and readily for a bounce you determine whether a stock is overboarder or sold by charting the ratio of higher closes known as the relative strength index or rsi the index is a momentum that measures the direction a stock is going and the velocity of the move we like to match the strength of individual stock to something else, perhaps the relevant strength of the sector and maybe a larger index and measure the price action we're always looking for anomalies where strength stands out because that's a sign of a pending move perhaps a momentum switch we wouldn't know if we read the research on the stock. for relative strength chart work, i turn to bob lang and tim collins, both of whom have done remarkable work and heard about all the time on the show many technicians vary the length of time. both lang and collins use shorter periods of time, ten days, two weeks to get a beat on the strength of the stocks they
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look at. they are looking for any presidepatter because that's a sign some breakdown of magnitude might be upon us. they love the relative strength but like to time the buys after pull backs and get the better entry point. when a stock gets over bought, it is right for a pull back because ones with many buyers reach to take supply tend to snap back after they got too far away from the longer term trend line the inverse can be true, too a stock can fall so far, so fast you should expect a snap back because it technically over sold you hear me use the terms. we see the patterns constantly they are reliable indicators a change in direction is about to occur. these are terrific action points, people if you are debating buying a stock after you've done the research and find the stock is over bought, i usually tell you to wait for a pull back. that almost always comes collin chart work to retrace.
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retracing isn't necessarily negative chart something tricky periodically, some stocks are so strong they breakthrough all the ceilings of all traditional measurement periods and stay over bought perhaps for weeks at a time to find the historical trading patterns that trap them within the bands of extremes they defy the notion of the inevitable gravitational pull of the old equal lib yum and can't be contained by any of the various ceilings that over bought conditions usually bump into and come crashing down from when you spot these high lie ly unusual moves you may have to strap yourself in. this is what i mean. this is rare what it happens, it's big money. we saw it occur as dan fitzpatrick pointed out using the momentum indicator, his time in las vegas the summer the stock of las vegas sands, one of the largest casino companies had been
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repeatedly 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 strength after it pushed through instead of regrouping to cover the over bought status that's a very rare pattern it stayed over bought which means good things will be ahead. it never retreated as you would have expected. buyers wouldn't quit despite the stock being over bought and that is a sign the strongest kind of positive move in the book might be taking place. at any given time you're expecting a pull back but you have a gigantic over bought. it went from $10 to $48 in a straight line with no substantive pull back to speak of and over bought condition that can stay over bought is a golden opportunity for a huge move right back to being over bought again. remember, i like to marry th fundamentals with the charts so
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i'm not too dependent. what is happening on the chart it was able to stay over bought, you know what was going on then? the chief locus of profits for l las vegas sands went from vegas to mcelderacal they transformed the nevada gaming company into an international power house. the charts told you about the transformation who were still days that we had such a horrendous decline to begin with they weren't thinking about macau here they use that to spot pivots they tell us whether move is for real or not when there is a small move on white volume that technicians ignore and there is a small move on heavy volume the chartest drill down laser-like to see if it's a precurse and more trait traidbdeable
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they are looking for accumulation, large money managers accumulate stock in an aggressive way or distribution is selling of a stock and that could telegraph a big decline. they measure the moves by something called an accumulation distribution line when the calculations of accumulation distribution line involves -- i know it is charting of whether a stock closes higher of greater volume or on any given day, the brock cage house will offer. i care passionately about it because it will go against the grain of conventional thinking and that's why i love charts so much they go against the fundamentals sometimes and sometimes they are right. we saw them being right 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 tim collins saw it another way he said the accumulation distribution line showed while
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the stock had down days, and heavy volume on the up days. more money was flowing into the stock than out of it such a consistent persistent assu accumulation or selling pattern convinced him large funds to own the stock long term. not to run it for a quick move it turns out what i didn't see, what i was so confused about was that monsanto stock was correlated with the price of corn, which was going higher back then because of new found demand for ethanol and gender by government price supports. i was far too concerned about near term earnings and worries about a short fall and wasn't thinking big picture but the chart showed big picture the work of collins told you not to fear. something bigger was developing. he was dead right and a stock that would have kept you out turned out to be a big winner when corn shot up and the earnings up with it.
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the big boys knew the relationship with corn in monsantos business and you could piggy back off which isolated the stlebrength of the stock. i got smoked he saw it. bottom like we have to spot important terms that might not be visible for those trying to spot fundamentals. powerful moves to elude those only focused on the underlying companies and not the action of the stocks themselves. let's go to dan in illinois, please, dan? >> caller: boo-yah, thank you for demystifying the market and accessible. >> that's what i want. i want everybody to understand their money. that's my goal how can i help. >> caller: i'm wondering the stock and a company i like and
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the stock just keeps going up but most comes down as maybe two, two and a half percent. how can i get it more sizable? >> my discipline says you missed it that's one of the things my discipline will cut off the downside than the upside and if you bought a position in stock and it kept going higher and you didn't get more. well, it's a trade and you got to take it i know people don't want to hear that but when you violate the basis and pay up, i can show you for years and years and years for my travel trust, i've done the work it is always a mistake chartest use all different types of indicators to despite big moves and helps them stay ahead of the game and fundamentals and you're ahead, too. much more "mad money" ahead and head and shoulders is only for preventing dandruff. how it can make you money. the jets and the shark, you're the sharks yo you're not going to want to miss my take and got a burning question i'm taking your tweets go ahead and tweet me @jimcramer
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. we've learned a lot about the key terms of technical analysis let's look at the individual charts many of you find fascinating as some of the patterns, they almost soun silly as if they are mimicking letters or shapes or body parts. i learn not to ignore one of the simple but far reliable patterns
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out there, the dreaded head and shoulders pattern. my travel trust bought out it because of the early buy i like to show you what i did wrong. i can learn from my mistakes we have become enamored in doing it and make it less depending on metal itself and more on forms of aluminum. something it solidifies when it announces it splits into two separate companies take a look at alcoa it went to february 2011 rising from $13. nice rice up to 17 as the earnings finally turned around not long after the stock hit 17, it took a quick dot back to 15 no reason i could discern and went back to 17.
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and went up to 18 on the eve of the quarterly report i thought the quarter when it was announced was a fine one beating the top and bottom lines. most of the time that's all you can ask for. what worried me is after initial positive reaction, the stock dropped down to 16 and change on the news a few days later, it's back to 17 and i felt almost vindicated, right? come on. ready to go back at the 18 level. so i went and bought more right there. could i have been more wrong i don't think so that 17 to $15 dive represented on the chart as a .a and b and follow the run to c, 18, 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 it that is the most frightening
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pattern in the entire chart book and alcoa traced it out just when i thought we were out of the woods. what was happening during that head and shoulders pattern flagged? aliu aliuimb -- aluminum came into glut over the course of the next few years, they were able to be much less dependent on the commodity of the completion of the brutal head and shoulders pattern from a few years before remember again, one of the things i admire about technicians is the consistency si and the head and shoulders and inverse head and shoulders signals the opposite or a chance for glory. at the beginning of january 2013, lots of people thought the economy was taking off and investors were running from the classic food and drug stocks, one you don't need a strong economy and headed towards the cycl cyclic the kind of rotation that kind
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is usually the death for stocks that typically go higher when the economy is slowing and tim collins said you know what, jim? you have to look at pfizer the world's largest pharmaceutical company would be the company i would shun i would never touch this when the economy is speeding up but take a 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, okay, in november? the stock bottom to form the head and december a rally and then a pull back to create the right shoulder the key with this pattern is the neckline it says you're about to witness a big, big move. pfizer's neckline was at $25.80. and collins predicted if you
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take out the neckline it would be in for a monster run. given money was pouring out of the staples and drug stocks, i was confounded by this pattern i didn't trust it one bit. i mean, come on, king of rotations. i knew it was a bad stock. collins said rotations, smoke-tations. something big was going on to make it buck trends. it was inconceivable sure enough, he was right. i was wrong. the stock almost instantly jumped more than 10% after collins told me to buy it with both hands what caused the move soon after collins flagged this bullish reverse here that reverse head and shoulders pattern, the huge drug company decided to spin off the division it was a shocker and a move that ultimately created $15 billion in value who knew the chart did. here is the bottom line. patterns matter. when you see head and shoulders pattern, don't take chance,
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sell, sell, sell, at least some of it but 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 work on these patterns is vindicated far more often than the skeptics would ever think possible. stay with cramer
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show that press big down and up moves but those patterns aren't the only patterns to be relied on to tell us the truth when the fundamentals give us little insight. one chart type we've come to love on "mad money" is the cup and handle pattern we seen it so often and been so reliable, i use it to keep myself in stocks i might of otherwise been turned off on or shaken out by. take dominos we got behind the pizza fran ca - franchise down to $10. the stock exhibited sideways action and it began to drift down on no new news. i hate these because i'm paranoid enough to think something might be happening i don't know about it and they do the case with dominos in the 30s and the company isn't talking, that's when the technicians are needed so one of our absolute favorite charte esest asked for his help
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define a domino's moment had come and gone. take a look. here is what he sent us at the time when we reached out to him, he had begun to drift back up and maybe we want to bless telling you to sell. we thought the thrill might have been going here and maybe should ring the register. take the big gains for viewer ss so tempting there. poncy told us to do the opposite that's the sign he needed and to load the boat up, he said was a special moment and he was anxious to tell why. with that return up to 36, okay, dominos was tracing out a perfect cup and handle formation. that's right a pattern we have found as reliable as head and shoulders a total launching pad for a much bigger move. you caught the beginning at $36 that sloped down to 28 where the base of the cup was. okay i was really nervous there all right? he told me not to be the stock then climbed back to 36, create the right side of the
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cup and then we got a 37 -- a sigh, a little side to 37, 38 and that would be the beginning of a handle that almost always signals a much higher move handle handle always goes like that very reliable. sure enough, poncy's work nailed it the earnings accelerated it turned out the stock was simply consolidating and ready to power higher. this was positive action dominos right there, what they were doing was embracing technology the web and the cell phone, facebook, eliminate order takers and let customers take placers via the net. we would have let a minimum of a double on the table if it weren't for poncy's guide. monster beverage, i thought they run out of room and couldn't go higher i needed a chartest to give me the skinny because i kept hearing red bull competition was crimping monster and the
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distinct possibility of regulatory intervention to the energy drink business always deadly and set me straight he said that for months the stock a monster had been bouncing off the 100-day moving average, the blue line you can skpee looked like it was going down, right? it rebounded look at this rebound, rebound, rebound, rebound. he said monster was tracing a series of triangles known as flag patterns where you have a flat ceiling of resistance and upward sloping floor see that boom, boom the way the stock hits the new line punches right through he said any time you get the pendant formations that are short term consolidations and a continuation pattern, you do not have to worry about a stock running on empty matter of fact, you had to buy this with both hands stock at 49 and proceeded to jump to 79 confounding the naysayers who may have been less negative had they known about this pattern and cared about it, they were worried about the government intervening monster tied up in coca-cola and
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a truly monster soft drink company and shows you the energy drinks are here to stay. once again, i would have been shaken out of this stock's move if it were for poncy and his chart holdi gholding. there are variations they identified this as a big move up. citi group, everybody hated it in june 2010 where the lowest kept getting higher and the high stayed the same. this is known as a wedge pattern. they find it reliable and triangle pattern we've also had tremendous success following the works of carol, the queen you can't not mean here in the show and the medieval italian mathematician whose work i talk about. the fib queen uses ratios found in nature. we also like the work of carly garner who uses data from the commodity trading commission to examine when too many hedge funds lead the way and we have to veer in a different direction
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my degree from snhu has helped me tremendously. the flexible class schedules allowed me to go to work full time, run my catering business and be a mom and parent. when i reached this accomplishment, it was like, it's here, it's happening, it's now. we at southern new hampshire university are the ones who succeed. we are the ones who break through.
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i want you to continue to own a lot of stocks. you won't get a lot of income from other activities and bonds and stocks compound. you get that dividend. keep reinvesting here at src talent tweet tweets @jimcramer. my 19-year-old son wants to start saving for retirement. we'll start with an s&p low index fund once they have put $10,000 inside, then they can focus on individual stocks. those are the rules. i'm not varying them next a shoutout, don't let the haters get to you, jim keep doing what you're doing stay above their pettiness periodically i get tired and angry and feisty but what i like is that 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, you want new investors
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to max out on index funds before investing out on single stocks 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 an index fund. sorry for the misinterpretation by you. >> excited to have found it at a young age. the guy is a genius and a led of valuable information for free. i only wish my mom and dad are still alive because then finally, they can say hey, i told you jimmy stay with cramer
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