Earlier this week Cramer talked about how the most infuriating thing about this market for the professionals is how patterns that had worked in the past were no longer playing out as expected. It's like flying a airplane without any instruments or driving a car with the dashboard ripped out, because you have very little frame of reference.
But, surprisingly, one thing that has actually been working is looking at the charts, technical analysis. We've repeatedly said that we are fundamentalists, we rely on the facts about the underlying business to judge stocks, not their price action. But when the market is this difficult, and just because we've had some strength for the first time in a long time doesn't mean it's gotten a whole lot easier, we will use any tool that works.
The old joke about technical analysis is that it works, until it doesn't. That's because it's usually all about identifying trends and following them until they break down. But from our perspective, the opposite now seems true. Technical analysis didn't work, until it did.
Look at all the wins the technicians we've featured in Off The Charts have had lately. We talked about how Dan Fitzpatrick, Cramer's colleague at TheStreet.com where Jim is chairman, liked Family Dollar and Big Lotsbased on the technicals last week, and both of them broke out shortly thereafter. Fitzpatrick even nailed it when he predicted that Big Lots would soar the next morning after reporting earnings. We like the trade-down plays, especially Family Dollar, based on the fundamentals. But there's no denying the charts totally nailed it.
The same goes for Rick Bensignor, another of Jim's colleagues from TheStreet, whose ideas we featured on this Tuesday's Off the Charts. On Monday night he predicted a big surge in Bank of America, a very bold call, and even though it ran on Tuesday before we talked about it on the show, it's kept running since then.
And don't forget how Ken Shreve of Investors Business Daily, saw bad news coming in ManTech's chart right before the COO resigned and the stock took a big haircut.
What's a fundamentalist to do in a market where the usual instruments have stopped working? Maybe it's time to look at the charts.
Cliff Mason is the Senior Writer of CNBC's Mad Money w/Jim Cramer, and has been that program's primary writer, in cooperation with and under the supervision of Jim Cramer, since he began at CNBC as an intern during the summer of 2005. Mason was the author of a column at TheStreet.com during 2007, which he describes as "hilarious, if short-lived." He graduated from Harvard College in 2007. It was at Harvard that Mason learned to multi-task, mastering the art of seeming to pay attention to professors while writing scripts for Mad Money. Mason has co-written two books with Jim Cramer: Jim Cramer's Mad Money: Watch TV, Get Richand Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). He is 100% responsible for any parts of either book that you did not like.
Mason has also had a fruitful relationship with Jim Cramer as his nephew for the last 23 years and will hopefully continue to hold that position for many more as long as he doesn't do anything to get himself kicked out of the family.
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