On Friday, CNBC’s Jim Cramer presented new technical analysis from veteran chartist Larry Williams, whose proprietary market indicators suggest Google parent company Alphabet, Amazon and Coca-Cola are stocks to watch.
“Right now the charts as interpreted by Larry Williams suggest we have incredibly bullish action on Google, very good bullish action on Amazon and money in banking action in what we call KO, Coke -Cola. I wouldn’t bet against Larry Williams,” the “Mad Money” host said.
Cramer said that judging by Williams’ methodology, Alphabet and Amazon have held up better than other big tech names that have been battered during this year’s market volatility.
Here are three separate analyzes of the current and expected performance of the three companies. Cramer’s analysis of Alphabet relates to the company’s class C shares with the GOOG ticker, not to be confused with the company’s class A shares GOOGL.
Here’s a look at Alphabet’s daily chart:
Cramer said the tech company has a “stable support floor,” which lets Williams know that Alphabet’s shareholders have continued to buy shares despite market turbulence. “Williams says when a stock holds up as the broader market is hammered, that’s one of the strongest patterns he’s seen,” Cramer said.
There are more signs that the stock is bullish, according to Cramer. The first is the blue line at the bottom of the chart, called the equilibrium volume indicator, which measures volume flow. This line shows Alphabet stock volumes held above January lows in February and March, Cramer said.
When examining Alphabet plotted next to one of Williams’ indicators that measures a stock’s professional accumulation, the stock moves sideways as the indicator’s line rises – another signal that the stock is bullish, Cramer said. Here is the table :
Williams thinks “the stock is now bouncing hard off its lows and…it has more room to maneuver,” Cramer said, adding that the stock hasn’t performed as well as Alphabet.
Here’s Amazon’s daily chart plotted alongside its seasonal pattern, which measures how stocks generally behave at any given time of year:
“Just like with Google, this is exactly the time of year that Williams expects a calendar-based bottom,” Cramer said.
While Williams’ analysis suggests that Google and Amazon will perform positively, Cramer acknowledged that tech stocks’ struggles this year could make those stocks unattractive to wary buyers. An alternative defensive stock is Coca-Cola, he said.
Here is the Coca-Cola daily chart plotted with the balance volume line:
Williams believes that because the stock’s volume has risen even as Coca-Cola has fallen from its highs over the past two weeks, “big institutional money managers are buying it aggressively,” said To screw up.
Cramer added that the beverage company’s seasonal pattern suggests it will soon bottom, according to Williams’ analysis. Here is the Coca-Cola stock plotted with its seasonal pattern:
“Coke is exactly the kind of stock hedge funds love to hold at this point in the business cycle, which is a big reason it was able to outperform major averages. Williams is betting the outperformance will continue,” Cramer said.
Williams also believes there’s a strong correlation between Coke and sugar, which is a major contributor to the company, Cramer said. Here’s a chart showing both Coca-Cola and sugar prices pushed up by about a year:
“You might expect the stock to go down after sugar goes up because that’s a major entry cost for them, but when you move the data forward one year, Williams finds that Coke’s stock follows. sugar. If the trend holds, that means Coke can continue to rally,” Cramer said.
Disclosure: Cramer’s Charitable Trust owns shares of Alphabet (GOOGL) and Amazon.
Register now for the CNBC Investing Club to follow Jim Cramer’s every move in the market.