Cramer Remix: One of my favorite stocks
The market finally broke its five-day losing streak on Friday when it bounced back strongly, with the averages closing in the green. However, the fact remains that stocks have had a hideous start to 2016.
However, Jim Cramer reminded investors that not every stock has sold off. In fact one of Cramer's favorite stocks is Verizon, which has done quite well.
Verizon traded near its 52-week high on Friday, as its juicy yield has acted like a magnet for investors seeking refuge from the dull fixed income market.
The company has also invested extensively into new technology, and the CEO Lowell McAdam revealed to Cramer last week on "Mad Money" that it is considering an acquisition of Yahoo.
"I have to meet customer's needs, or I'm out of business. It's that simple," McAdam said.
The past three weeks have been crazy on the stock market, even for a veteran like Cramer. The volatility has become the main focus of earnings season instead of earnings.
However, instead of going off the rails worrying about the big swings, Cramer wants to use the recent volatility to buy individual stocks that have nothing to do with these issues when the moment strikes.
"Let's accept the fact that we still have to listen to what individual companies have to say, and when the market calms down, we can figure out what's so darned cheap based on what they told us that it will make sense to do some buying," the "Mad Money" host said.
VF Corp: Cramer is intrigued. The stock tends to trade down after it reports, and he thinks there could be an opportunity if it trades down to the point where it yields 3 percent.
"Notice how I mentioned yield over and over again? That is because Treasury rates have gotten so low that they are almost uninvestible," Cramer said.
Read More Cramer's game plan: Bye bye, Treasuries
In addition to having stocks on his radar, Cramer also likes to keep an eye on privately held companies that can give a powerful read of the industry they are in.
Ahead of the 2016 Toy Fair in New York this weekend, Cramer decided to speak with Moose Toys. It is the Australian company behind Shopkins — one of the hottest toys at the moment.
Shopkins are a collection of googley-eyed collectibles and miniature versions of everyday items found in a typical store. And the toys have been flying off the shelves.
How did this company create such a branding sensation? Cramer spoke with Moose Toys chairman and co-CEO Manny Stul, who commented on the value created with the toys.
"If they are limited in availability, which several of them are, they just go up in value. You mentioned some of the prices; some of them have gone up to about $21,000. It's not unusual for some of them to be selling for about $1,000 each," Stul said.
Over the years, Cramer has found that charts can help investors to break away from the pack and spot a move before it happens.
"I would consider looking at the chart of the stock you like as part of the homework, making it ingrained into your thinking," the "Mad Money" host said. (Tweet this)
Part of looking at the charts is being able to spot the bottom for the best entry points and ceilings for the best places to exit from a stock. When an investor buys a stock, they are betting from the start that the stock will go up. That means understanding the historical patterns of the charts and where it might be headed.
"As long as sellers overwhelm buyers with their dumping, no base can form. A climax is a sign that those potential sellers who had been holding on for some time are finally giving up en masse," Cramer said.
Read More Cramer: Spotting a bottom after a long decline
The most simple and reliable pattern out there is the dreaded head-and-shoulders pattern. Cramer learned not to ignore this pattern when his charitable trust bought Alcoa in the low teens in 2010, and ultimately took a blood bath because it was a really early buy.
Alcoa's stock had a healthy run from winter of 2010 until February 2011, rising to $17 from $13. The stock ran to $18 on the eve of its quarterly earnings report, and Cramer thought it was a fine quarter when it reported.
Yet what worried him was that even after an initial positive reaction, the stock dropped. So a few days later, Cramer assumed it would take out its $18 level and went back to buy more.
Cramer was wrong — extremely wrong.
At the end of the day, patterns matter. So when you see a head-and-shoulders pattern, no matter how confident in the stock you might be, Cramer believes you should sell. And when the reverse head-and-shoulders develops, then consider buying it.
Read More Cramer: Yikes! Scariest pattern in the charts
So in situations when a stock's fundamentals give little insight into the direction it is headed, the technicals could light the way. Another chart type that Cramer relies on is called the cup and handle pattern. In fact, he has used the reliance of this pattern to stay in stocks that he might have otherwise sold.
A cup and handle pattern is one that resembles a cup with a handle. The cup creates a 'U' shape with a downward drifting handle.
Cramer learned the lesson of the beautiful cup and handle opportunity in the stock of Domino's. He was thinking about selling the stock, when chartist Ed Ponsi set him straight and told him not to.
Ponsi pointed out that Domino's had reached a pivotal moment and was getting ready to launch into a bigger move. Sure enough, Ponsi nailed it—and Domino's proceeded to double and then some. It turned out that while Cramer was nervous about the stock, it was actually consolidating and getting ready to power higher.
"Technicians and fundamentalists can co-exist. Make peace with them both, and I bet you will make a heck of a lot more money than if you are blind to one or the other and certainly to both," Cramer said.