A battle is brewing between Jim Cramer and technical analysis expert Rick Bensignor, who disagree about whether it's the right time to buy
Cramer is bullish on Goldman while Bensignor thinks it may be wise to sell. It's a showdown of fundamentals vs. technicals.
In the "Off The Charts" segment of his Mad Money show Tuesday evening, Cramer went head-to-head with Bensignor over the chart of Goldman, a stock that Cramer owns for his charitable trust,
Cramer told viewers that he sees more upside for Goldman and disagrees with Bensignor, the chief market strategist at Execution Ltd. and the author of
subscription service, which provides investing strategies based on technical and behavioral models.
Goldman has been on a tear this year, up 60% with steady gains since March. The stock closed at $135.41 Tuesday, compared with $84.39 on Dec. 31. Goldman's 52-week range runs from a low of $47 to a high of $193.
Bensignor, however, sees the daily and weekly charts indicating that buyers are becoming exhausted over the monster run from $47 to over $140. Bensignor noted resistance at the $140 level as well as dwindling volume as the stock edges higher.
"We think Goldman Sachs is somewhat ahead of itself," Bensignor said in an email in response to Cramer's comments on Mad Money. "We are not buyers of the name here in the upper $130s, but would use multiple Friday closes above $140.82 as an area to rethink the idea of having taken profits and even having told the most aggressive traders to short the name."
Bensignor is looking for the stock to move to the $117-$113 range as "a place we might be more apt to look at the long side, and should this sell down to $105-$95, we would be very willing to commit substantial capital on the long side."
"We constantly trade in this market environment," Bensignor said. "We don't believe in marrying stock positions these days. We're very happy just dating them."
Cramer said he respects Bensignor's concerns that the stock has run too far too fast and is likely for a pullback, but he doesn't see that as a reason to sell.
"Goldman is simply a fabulous company," Cramer said. "It knows how to manage risk." Cramer said he's a buyer of Goldman whether it goes higher, lower or stays the same. The company is in a great position to take market share, increase margins and continue advising companies how to navigate these tough times.
In the first quarter, Goldman earned $1.81 billion, or $3.39 a share, beating the $1.64-a-share consensus among analysts surveyed by Thomson Financial. The government's stress test also concluded that Goldman doesn't need to raise additional capital, positioning the bank to repay its bailout funds this year.
"I say the fundamentals are good on their way to being great," Cramer said. "I would be a buyer here. This is the level. I will buy more if Bensignor is right."
While Cramer focuses on the fundamentals, he explained to viewers that it is important to know what the big investors are doing because the impact of the buying and selling patterns of the "big guys" can matter more than fundamentals at times. Charting reveals "the footprint of big money," Cramer said.
Although he disagrees with Bensignor on Goldman, Cramer acknowledged that the Top Gun Trader has had a "scorching hand" with calls such as the March 9 recommendation to buy
Bank of America
when others said sell.
Bensignor, in his emailed response, also pointed out that stock calls need to be adjusted as the market moves.
"Like all my calls, no matter what market or time frame they are in, there is always a minimum target (and often secondary targets), but there are also always stop-out levels, where we opt to get out of the idea if it is not panning out," said Bensignor, who previously served as chief market strategist at
Morgan Stanley Principal Strategies
This article was written by a staff member of TheStreet.com.