CNBC’s Jim Cramer told investors on Friday to avoid Nasdaq Composite stocks and instead bet on stocks listed on the Dow Jones Industrial Average.
“The tech industry started the new year strong and did very well today, but the charts need to be a little more careful with the Nasdaq showhorse and bet on the Nasdaq workhorse, as interpreted by Larry Williams. It shows that… the Dow,” he said.
Stocks rose Friday to end a positive week in all three major indices. The Nasdaq is up 11% this year. This is because investors bet on a less aggressive rate hike by the Federal Reserve.
To illustrate Williams’ analysis, Cramer looked at daily Nasdaq-100 charts going back to November 2021.
Some pundits see the index’s breakout above the 200-day moving average over the past two days as a bullish sign, but Cramer said the Nasdaq 100 has since broken through past levels. Williams points out that it has fallen again.
We then reviewed the Dow’s daily charts going back to February 2022.
Cramer said Williams believes the Nasdaq 100 is a “showhorse” index because of the interest, but the Dow is more representative of Main Street.
He added that the Goods Index broke above the 200-day moving average in November and has remained above it since then.
“Williams finds this chart more convincing,” he said.
For a detailed analysis, see Cramer’s full explanation below.
