Off the Charts: Caterpillar

Technical analysts have been able to accomplish what many on Wall Street have not of late: predicting the market’s movements. And those of some key stocks as well. Of course, rarely can anyone get the call right 100% of the time. But recently the chartists have outperformed fundamentals-based investors more often than not.

That’s why Cramer has been spending so much time on technical analysis. He knows that the big money managers subscribe to this school of investing, and he wants viewers to know how it works. Each Tuesday he highlights a stock’s chart, covering terms like “reverse head and shoulders” or “neckline” or “moving average convergence/divergence” and how they translate into returns or losses.

Cramer then compares this analysis with the company’s underlying business and the present economic environment. The approach gives investors a fuller picture of the stock in question, and points out the flaws and gaps in each trading method. After that, viewers can decide for themselves which they prefer. Or better, they can use both to their advantage.

This week’s pick was Caterpillar . Watch the video for Cramer’s breakdown of both the technical and fundamental cases for buying or selling the stock. He’s often been a fan of CAT, but is that still the case?

Cramer's charitable trust owns Caterpillar.

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