Mad Money

Cramer: Sly strategy for catching major move

Apple: Technicals foretell stock surge?
VIDEO7:0607:06
Apple: Technicals foretell stock surge?

(Click for video linked to a searchable transcript of this Mad Money segment)

People are often surprised by what Jim Cramer does in an attempt to get ahead of a big rally.

That's because the "Mad Money" host is a fundamental investor who firmly believes that things like quality management, smart business acumen and solid market position are the ultimate catalysts that drive a stock higher.

However, Cramer also pays close attention to technical analysis as well. "I find that surprises people," Cramer admitted.

Adam Jeffery | CNBC

Many fundamental investors find things like a 'head and shoulders' pattern or a 'cup and handle' formation more like voodoo than serious stock analysis.

But not Cramer.

Time and again, his proprietary research shows that technical analysis can be prescient. Therefore he leverages it to confirm a fundamental outlook.

For example earlier in the week, Cramer profiled technical analysis from Carolyn Boroden, whose interpretation of Fibonacci relationships suggested Apple stock was about to rally.

Borodon concluded that $522 - $531 would emerge as a level of strong support for Apple and that a rally was more likely than a sell-off. Sure enough the stock declined to those levels on Tuesday January 13th then bounced higher, closing at $557 on Wednesday.

Cramer believes the technical analysis confirmed something his fundamental analysis had already suggested for quite some time. That the appeal of the new iPhone as well as a deal with China Mobile would drive profits and a subsequent advance.

In turn, Apple CEO Tim Cook provided the fundamental confirmation after he said the deal to sell iPhones on China Mobile's vast network was a "watershed" moment for the company.

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Now that's not to say that Cramer follows technical analysis with abandon – he doesn't. He always monitors the track record of the analyst and only gives serious attention to the best chart watchers.

However, when he finds a good analyst he pays close attention to their forecasts. Time and again he finds that the interpretation of patterns turns out to be a rather useful tool when making investment decisions.

"I believe technical analysis must be embraced if you are going to catch major moves," Cramer said.

*For Boroden's complete analysis including her upside Apple price target follow the link to "Apple, Twitter: 2 stocks at points of inflection?"

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