CNBC’s Jim Cramer on Friday told investors to avoid stocks on the Nasdaq Composite and as an alternative bet on names listed on the Dow Jones Industrial Average.
“Despite the fact that tech has began the recent yr off well and today was wildly good, the charts, as interpreted by Larry Williams, say you might have to be a little bit careful with the show horses on the Nasdaq and bet on the draft horses on the Dow,” he said.
Stocks rose on Friday, closing a positive week for all three major indices. The Nasdaq is up 11% this yr as investors bet on less aggressive Fed rate hikes.
To elucidate Williams’ evaluation, Cramer checked out the Nasdaq-100 every day chart for November 2021.
While some techs consider it is a bullish sign that the index has broken above the 200-day moving average in the past two days, Williams points out that the Nasdaq-100 has returned after breaking above levels in the past, in accordance with Cramer.
He then checked out the every day Dow chart from February 2022 to February 2022.
Unlike the Nasdaq-100, which Williams says is a “show horse” index as a consequence of high demand, the Dow is more representative of Important Street, Cramer said.
He added that the blue chip index broke above its 200-day moving average in November and has remained above it ever since.
“Williams finds this graph rather more convincing,” he said.
For more evaluation, watch Cramer’s full explanation below.