Dow falling 50, because the s p oscillator is now in extreme overbought territory, which tells me we are due for some pain. The house of pain. Before i explain my reliance on this darned oscillator, let me break down what i saw. Its inextricably late to several inputs. Stocks intend tend to go pie higher if we have three circumstances a weaker dollar, higher oil and stronger chinese stock market. I may not necessarily agree that these should cause a raleigh. I think higher oils mean lower personal save,s lower personal consumption, higher cost for most businesses, only 10 directly benefits from a more expensive group. It doesnt matter what i think, though. Right now the correlation between higher oil and higher stock prices is so ingrained its not even worth the intellect why will combat. When oil was flying high today, you know, you had a decentlooking market, but it sold off. As soon as it did, that directly turned the tape into the red. It was incredible. We know that the chinese stock market has been manipulated higher by their government. It shouldnt matter at all, right . But again i dont determine these thing. Trader tend to want to buy the weaker dollar as a positive actually makes total sense to me, because the earnings of u. S. Based International Companies are crimped, as my friend scott wapner pointed out on halftime, now investors seem to be willing to excuse sales, and thats how the symptom of Johnson Johnson could kind of hang in there, despite deliver a huge decline in sales, versus last year, when it reported this morning. Its true also that j j announced a buyback, but they overlooked the weakness caused by the stronger strength, looked through it and determined that the sales werent merely as bad as the headline number. Still in the darn dollar would go down, profits would soar. Thats just a fact of life. Its why ultimately the greenback matters enormous oy will the overall trajectory, but it doesnt matter today. When they were all flashing green as they were at one point, why dont you say any weakness is a buying do you know. Why not urge people to guy stocks, knowing they have the proverbial threepronged wind at their back. The st. And poors oscillator. Thats why. For 28 years ive gone over the charts every week. First when they were handdelivered it to my house, i loved it that way, but now because im in the digital way, electronic loy. Theyre sent to me from the s p. I treasure them. They give me ideas. They allow me to make a mental picture of whats going on. Theyre look an old pair the wing tips. For the price of a subscription std poors throws in a reading of the oscillator. We know the averages have been strong for days on end. Ive watched it go up and up and up every night. And then there are levels when i just say enough. If you havent bought anything, dont do it now. The levels where that extra warning goes out is when the oscillator goes to plus ten. Guess what . That is the number the oscillator hit last night after the close. Consider it the equivalent of the danger zone. And line kenny loggins, i would rather avoid the highway to the danger zone. I know from twitter followers, if the market continues to go higher, the callcallers will write and say you kept me out of the best rally in years, theyll character assassinate me, make in clear im an idaho outthat has never done anything right. And i would be better off if i ran into chase utleys spikes. Even though it was is almost an exercise in futility. I had kind of a religious twitter experience when i visited my daughter in oregon. First, i bellock any twitter troll. She says why not thank people and tell them they are terrific . I was growing tired of twitter, but our guidance in the big company, theyve changed my attitude. Im even periscoping before the show, to give you a flavor of what youre about to see. By the way, you could see she be spray painted tonight while i talk about the show, kind of a pregame. So why not debate people if you get a real rally while calling you an idiot. Simple . I only know what my discipline tells me. Sure there are instances when i continued to make money buying stocks, there were moments when it seems too juicy. One that will most likely require the combination of the asset stakes, and moulsen coors is the logical buyer, or you may not catch a possible merger or better than expected intel quarter. I can see getting blame for missing these moves and hundreds of others like them and the smiley faces with the sun glasses may not cut t however the majority of the stock performs ive made, when the oscillator exceeds 10 have been met not with terrific gains but with tears. [ crying ] not long after. Historically the risk has been way too high and the reward too low. Things just tend to go wrong when wering this overbought. Even when stocks have been hammonder relentlessly and are actually oversold. The biotechs will still go lower once this thing rolls over. Lets say i would be buying a drug stock, then the democrats trash the pharmaceutical industry, and then you come in tomorrow and think what the heck was i thinking . And someone will some analysts will downgrade it. Thinking were at a nice level, and then a bad earnings report. These things just tend to happen, and given how overbought the market is, they tend to be more severe than if the stocks had already been pounded. I know the oscillator is add on the with the inputs, you may think it should be weighed, given the stock market. The finishes in the green, but the bottom line in this discipline and the show trumps my conviction. While i have tremendous conviction, which would mean you should be buying high quality stocks, my discipline never says hold off, because a better lower level is coming, so until this mark either goes lower or works off its oversold condition by doing nothing for the next ten day, i say its time to sit on the sidelines, yes, maybe even take some profits, at least until the oscillator drops back to more reasonable, less stretched levels. Why dont we start with adam in massachusetts. Adam . Caller booyah from massachusetts, jim. How are you, adam . Caller im all right. Ive bmr stock for years, its considered capital gains. As you probably know blackstone is purchasing the company, and the stock shot up and has since flatlined. Moves a penny theyre, a penny there. Pays a decent dividend. Should i just hold on to it . No, i want you to ring the register. You have the good gain. Lets just move on and congratulations. Philip to my home state in new jersey. Please, philip. Philip. To see. Caller the best analyst in the planet. Thanks very much. Were going to hang together in what will be the tough market over the next few days. Whats up . Well, i got that nice compliment, philip, now you can actually i think fill for don in ohio. Caller aloha cramer. Mahalo, partner. Caller caller exxon mobil, i bought it at 81. Good gift, 3. 68. Is it a hold . Buy more or should i go surfing . Hold right here, buy at 74. I think tech go as we retest the 33, 35 level, where i want people to be a buyer. I think this is a market thats very overbought. Buy on the way down. We go to dave in illinois. Dave . Caller professor cramer and the wife, none better. The wife insisted the ribs she made be called the wifes ribs and no longer cramers none better. I taye issue with that, but she doesnt watch the show, and i dont think her friends watch it, so i can say what i want. Go ahead, dave. I dispensed priceless information to philip and dave. Phillips in new jersey is back. Philip. Caller dr. Cramer, the best finish analyst on the planet. Love the books, thank you so much for your advice, i look forward to watch you you every day. This is a crazy, volatile markets. The stocking are up and down. Im a longterm investor, but i own budweiser at it 1ish, and the stock has tanked since then, and now they made the merger. I was interested in buying more stock know, as the market comes down, i would buy. This is a great for bud, a great deal for moulsen. When consolation got the gift, the stock went from 30 anyway, sure i believe that things are pretty positive, by my discipline says ute youve got to wait now. A lower level is coming. Mad money in the wake of yesterdays nasty pullback that continued today, im teakling the technicals. And then everybody is talking about the weak data out of china. Im revealing just ahead. Plus the Biotech Sector has struggling, but the window hand closed completely. Im eyeing new companies to see if opportunities could be knocking. Why dont you stick with cramer. Dont my a second of mad money. Follow jimcramer on twitter, send him as email, or give us a call at 1800743cnbc. Miss something in head to my name is rene guerrero. Im a senior Field Technician for pg e here in san jose. Pg e is using new technology to improve our system, replacing pipelines throughout the city of san jose, to provide safe and reliable services. Raising a family here in the city of san jose has been a wonderful experience. My oldest son now works for pg e. When i do get a chance, an opportunity to work with him, its always a pleasure. I love my job and i care about the work i do. I know how hard our crews work for our customers. I want them to know that they do have a safe and reliable system. Together, were building a better california. Weve got to talk oil. With the price of oil seemingly finding footage in the high 40s, after a roller coaster ride, we need to ask ourself where crude might be hiding next. Remember i think the oil rebound has been a major driver of the epic rally in our stock market, one that many people think ended today, but lets see. Its imperative that we get a sense of where oil is going. Thats why tonight were going off the charts. We want to put the oil market in perspective. Carly garner is a brilliant technician, cofounder of the and also used to be my colleague. Garner correctly predicted the big swoon down, and they should at the beginning of september she actively called for a sustained rumsfeldly. Shes got the best track record i know when it comes to texas tea. Remember its been down for two straight day, you just cant stop talking about the oil supply glut, but in garnerss view, what they focus are on are not exactly new. Everybody knew that opec would keep pumping in order to break as many of our Oil Producers as they could. In energyindependent america is not in their interests. Its not like the weakness in the chinese economy is shocking, either. The path v least resistance for crude is likely to be higher. Her reasoning . Check out this weekly chart of west it can it can intermediate crude top of the commissions weekly c. O. T. , or commitment of traders numbers. It tells you exactly how the Major Players are betting in the oil futures market. It buys buyers and sellers into real energy companies, simply using the futures as a hedge by selling futures, small speculators mean home gamers, then the group we really carry about the large speculators, meaning the big institutional Money Managers that tend to drive markets every single day. It allows garner to make some fabulous calls. What can she glean from this chart . Very interesting. At the moment, garner says the commitments of traders numbers do not paint a clear picture. Remember were looking for the large spec. In fast she says most people would read this as rather mutual. A neutrallooking chart at a time when most experts seem to believe the fundamentals are downright negative suggest to garner the smart money is resisting the more importantly the bulls have a lot of ammunition to buy. They are net long roughly 300,000 contracts. Thats what youre looking at. Now, the price of oil tends to be near peak when this number gets too high, because people are too bullish, and theres nowhere left to go but down. Because it means theres no one left to sell. This current number, its kind of somewhere in the middle. When the price of oil got crushed at the end of august, oak . The big boys had a net long position of 200,000 contracts. Thats the early one. Right here. 200,000 contracts. When the price of oil peaked last year this is this other one. When it peaked, they had 500,000. When it bottomed they owned very little, okay . Right there, they owned little, and when it peaked, they owned a lot. Thats why garner like this current number. On the other hand it means a big liquidation is very unlikely. For that to happen, they would have like they do here than they do now. At the same time we also know the big Institutional Investors still have a lot of money on the sidelines or betting against the price of oil. For garner thats a positive. It means they have plenty of cash they can put to work buying oil if they want to. In other words, any oil rally would have that means to me as it goes down, youre going to catch buyers, not sellers. What make garner think they will want to buy oil . Take a look at the weekly chart. Lately oil has been bumping up against a pretty strong ceiling of resistance at this 50 level, okay . Not only is 50 per barrel a powerful psychological barrel, garner also says its a critical Inflection Point that means the price of oil can break out above 50, it will also be breaking the negative trend that has controlled the action here in oil for well over a year, which garner thinking would lead to not just a rally, but a monumental rally. On the other hand if oil cant break through the ceiling, she wouldnt be surprised if it pulls back and retests for support at the 40 level. She thinking its more likely oil will break out to the up side. It only needs to move up two bucks and change to cross the 50 threshold. Plus garner points out that oil remain both the relevant strength index and the oscillator are sitting right any middle of the channels. Never, theres no reason that the recent rally cant continue. If oil does break out, she thinking at that point its entirely possible the short sellers will throw in the towel. In other words, garner is pretty darn sanguine about the price. Sanguine. But because oil is so important in this market and because its such a bullish view, i think its crucial we get one other view here. Hence we also checked in with carolyn verland, runs fibonacci queen, that website. Possibly representing a very real bottom and her longterm view is pretty positive. She also sees oil eventually warricking back to 70, even 60. But the word she used for me when i was asking about this move is eventually. So pull that in all caps or quotes, boroden thinking it might be moref to become cautious. Take a look at this daily chart of west texas crude. Boroden is running it through the fibonacci ratios. Or 100 to identify key levels where the charts trajectory is likely to change. Theres a big cluster of these levels to 76, to 52. 21. These are going to act as a powerful level of resistance. She thinking it will be hard to get through. Borodens methods covers time. The could have changed the trajectory between last thursday and yesterday, meaning they last two days are very significant, plus she also notes that last big rally lasted for 34 days, okay . And so far its been 33 traden days since oil bottomed back on the 24th, another sign the recent rally remember, she matches these moves is, well, let say concluding and yesterday and todays reversal were very significant days. She thinking it could come back down. Either way, the bottom line, carly garner and boroden thinking it could go higher. And remember garn are called the top, garner called the bottom, and garner says it goes higher. Much more mad money is ahead s let me reveal the crude truth about the sectors, which plays could be worth considering. And 34 Public Companies debuted on the Public Market in the third quarter. Could it be worth eyeing some freshfaced companies . We had a good call last week. Im going to give you my take. And its time to stop doubting the darned Chinese Consumer. Ill have a very against the grain view, so stick with cramer. Over the past couple weeks something incredible has happened. The most hated group in the market has transformed to the most loved. Thats happened all over the place, but particularly to the oil complex. As i told you before the break, some of our best technicians believe the price of crude could still be headed higher, perhaps a lot higher, though one said we had to do some backic and filling, which i think is probably right. Thats why you need some oil exposures oil goes down. Im going to be highlighting my names in the space, before the next move up. However, considering all of the recent turmoil, where many of the more highly leveraged seem to be standing on the brink. Its important that we be picky when it comes to buying stocks in the energy sector. We want to if something goes wrong, no, instead we move for high Quality Energy companies to at least sleep at night. My Energy Transfer partners, and i reiterate that ept is a terrific stock to buy as i expect the market goes lower. What other Energy Stocks are worth owns, in other words, that kind of trades with it, let me recommend o. X. Y. There gives you a nice stream of income and real Downside Protection in case the stock go lower. It tracks better, inclusion exxon, chevron, all those. Now, one of the things i like about this is that dividend. A dividend makes owns this company seem much less daunting. Its my highyield play, which is why its one of the large positions in my charitial trust, which you can follow the moves up, and ive been doing plenty of bulletins about the bock. When i tell you i like oxy, please dont take it as a reason to buy any oilrelated company with a big fad yield. Not auld dividends are created equally. Remember, a high yield can be a red flag, because it signals investors no longer can continue pays the different and may have to cut or eliminate its dividend entirely. Thats something you really have to keep in mind in the oil space, where so Many Companies have stressed is balance sheets. Im trying to pick the ones that wont get her that balancely. If youre picking a dividend stock, especially in the oil pass, you cant just look at the yield, you have to figure out whether or not the dividend is solid. When it comes to occidental petroleum, you get a yield which i feel is pretty secure. Remember, again, because the market is as overbought as i have seen it in ages, im not say buy buy buy, im saying right now or else, and, you know, then put a gun to the head wheres my gun . You get the point, right . Or put some benadryl to your head. Im saying as oxycomes down, i will like it more and more. All right . Im not ringing the bell. Im just saying i like oxy on the way down. So lets think deeper into this story. Occidental falls into the sweet spot between the and the smaller independents with higher growth, but weaker balance sheets. With oxy i think you get the beth of both worse, and an owl producer