CNBC’s Jim Cramer on Friday provided fresh technical analysis from seasoned chartist Larry Williams, whose own market indicators suggest Google’s parent companies Alphabet, Amazon and Coca-Cola are worth a look.
“Right now, the charts, as interpreted by Larry Williams, suggest we have incredibly bullish activity on Google, very good bullish activity on Amazon, and money in the bank in what we call knockout, Coca-Cola. I wouldn’t bet against Larry Williams,” the Mad Money host said.
Cramer said that based on Williams’ methodology, Alphabet and Amazon are holding up better than other big tech companies that have taken a beating during this year’s market volatility.
Here are three separate analyzes of the current and expected performance of the three companies. Kramer’s analysis of Alphabet is for a Class C stock with the ticker GOOG, not to be confused with a Class A stock of GOOGL.
Here’s a look at Alphabet’s daily chart:
Cramer said the tech company has “a stable level of support,” which allows Williams to understand that Alphabet’s shareholder base continues to buy shares amid market turbulence. “According to Williams, when a stock holds like this while the broader market is down, it’s one of the strongest patterns he knows,” Cramer said.
There are more signs that stocks are bullish, Kramer said. The first is the blue line at the bottom of the graph, called the balance volume indicator, which measures volume flow. This line shows that Alphabet’s stock volumes held above their January lows in February and March, Cramer said.
When examining an Alphabet chart next to one of the Williams indicators, which measures professional stock accumulation, stocks move sideways and the indicator line goes up — another signal that stocks are bullish, Cramer said. Here is the diagram:
Williams believes that “stocks are now bouncing hard from their lows and … they have more room to go up,” Cramer said, adding that the stock hasn’t performed as well as Alphabet.
Here’s Amazon’s daily chart, plotted alongside its seasonal chart, which measures how stocks typically perform at this point in the year:
“As with Google, this is exactly the time of the year that Williams expects to bottom, based on the calendar,” Cramer said.
While Williams’ analysis suggests that Google and Amazon will have positive results, Cramer acknowledged that difficulties in tech stocks this year could make those stocks unattractive to wary buyers. According to him, Coca-Cola is an alternative defensive action.
Here is a daily Coca-Cola chart with a balance volume line:
Williams believes that as stock volume has increased, even as Coca-Cola has fallen from the highs of the past couple of weeks, “big institutional asset managers are buying them aggressively,” Cramer said.
Cramer added that according to Williams’s analysis, the beverage company’s seasonal nature suggests it will soon bottom out. Here is a seasonally adjusted Coca-Cola stock chart:
“Coca-Cola is exactly the kind of stock that hedge funds love to own at this stage of the business cycle, which is a key reason they have been able to outperform major averages. Williams is betting that the dominance will continue,” Kramer said.
According to Kramer, Williams also believes there is a strong connection between Coca-Cola and sugar, which is the company’s main contribution. Here is a chart showing how the prices of Coca-Cola and sugar have moved forward by about a year:
“You can expect stocks to drop after sugar rises because that’s the main entry cost for them, but if you move the data forward a year, Williams will find that Coke shares are following sugar. If the pattern holds, that means Coke can continue to rally,” Cramer said.
Disclosure: Cramer’s Charitable Trust holds shares in Alphabet (GOOGL) and Amazon.
Login Now for CNBC Investing Club to follow Jim Cramer’s every move in the market.
Denial of responsibility