Charts suggest investors should bet on ‘work horses’ in the Dow Jones Industrial Average, Jim Cramer says

CNBC’s Jim Cramer on Friday told investors to steer clear of stocks in the Nasdaq Composite and instead place their bets on names listed in the Dow Jones Industrial Average.

“Even though tech has started the new year strong, and it was crazy good today, the charts, as interpreted by Larry Williams, say you need to be a little bit wary of the show horses in the Nasdaq and bet on the work horses in the Dow,” he said.

Stocks rose on Friday to close out a positive week for all three major indexes. The Nasdaq has climbed 11% this year, as investors have bet on less aggressive interest rate hikes from the Federal Reserve.

To explain Williams’ analysis, Cramer examined the daily chart of the Nasdaq-100 dating back to November 2021.

While some technicians believe it’s a bullish sign that the index has broken above its 200-day moving average over the past two days, Williams points out that the Nasdaq-100 has come back down after breaching the level in the past, according to Cramer.

He then reviewed the daily chart of the Dow going back to February 2022.

Unlike the Nasdaq-100, which Williams believes is a “show horse” index due to how much interest it gets, the Dow is more representative of Main Street, Cramer said.

He added that the blue-chip index broke out above its 200-day moving average back in November and has stayed above it since.

“Williams finds this chart a lot more compelling,” he said.

For more analysis, watch Cramer’s full explanation below.

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