In a time of market volatility, should you be playing defense with defense company stocks? Yes, and here's why.

General Dynamics (GD) , Lockheed Martin (LMT) and Northrup Grumman (NOC) are among TheStreet's Jim Cramer's 38 "anointed" stocks for 2016. Two had solid gains in 2015, and are outperforming the market so far this year with smaller losses than the S&P 500 .

Jack Mohr, co-portfolio manager of Cramer's Action Alerts PLUS charitable trust, said Lockheed Martin, an AAP holding, remains "the bellwether of the defense sector and, in our view, is poised for outperformance this year as global tensions rise."

In addition, he said, "the company has great prospects to ramp up its all-important F-35 program, which will be a stable source of revenue for years to come. In this current, erratic market environment, [Lockheed's] robust cash flow, consistently growing dividend and powerful buyback program offers a lucrative combination of growth and stability."

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Here's how to use technical charts and key levels to set the prices at which to buy these stocks on weakness and to reduce holdings on strength.

Making investment decisions has become more difficult when six of nine global stock markets closed Thursday in bear market territory. On Wednesday the Dow Jones Industrial Average (INDU) confirmed an old-school Dow theory sell signal.

In addition, the new economic indicator, the semiconductor index, is in bear market territory, down more than 20% from its multiyear high. When the chips are down, capture upside gains carefully and book profits on strength.

So earnings are key for these defense companies next week. Lockheed Martin reports before the opening bell on Tuesday and analysts expect the company to earn $2.91 a share. On Wednesday, General Dynamics is expected to report $2.34 a share before the opening bell. Thursday, before the opening bell, Northrup Grumman is expected to report earnings of $1.94 a share.

Here's the weekly chart for General Dynamics.


Courtesy of MetaStock Xenith

General Dynamics closed Thursday at $124.32, down 9.5% year to date and in correction territory 19.1% below its Aug. 19 high of $153.76. It set a 52-week low of $121.61 on Jan. 20.

The weekly chart is negative but oversold, with the stock below its key weekly moving average of $133.65 with its 200-week simple moving average a major technical level of $104.13. The weekly momentum reading is projected to decline to 13.17 down from 17.05 on Jan. 15 making the stock more oversold.

Investors looking to buy General Dynamics should place a good till canceled limit order to buy the stock if it drops to $101.63 and $97.74, which are key levels on technical charts until the end of 2016. Investors looking to reduce holdings should place a good until canceled limit order to sell the stock if it rises to $147.28, which is a key level on technical charts until the end of January.

Here's the weekly chart for Lockheed Martin.


Courtesy of MetaStock Xenith

Lockheed Martin closed Thursday at $210.79, down 2.9% year to date and 7.5% below its Aug. 19 high of $227.91.

The weekly chart is negative with the stock below its key weekly moving average of $215.04 with its 200-week simple moving average a major technical level of $148.14. The weekly momentum reading is projected to decline to 42.91 down from 51.43 on Jan. 15.

Investors looking to buy Lockheed Martin should place a good till canceled limit order to buy the stock if it drops to $156.53, which is a key level on technical charts until the end of 2016. Investors looking to reduce holdings should place a good until canceled limit order to sell the stock if it rises to $227.40, which is a key level on technical charts until the end of January.

Here's the weekly chart for Northrup Grumman.


Courtesy of MetaStock Xenith

Northrup Grumman closed Thursday at $181.22, down 4% year to date and 6.6% below its Oct. 28 high of $193.99.

The weekly chart is negative, with the stock below its key weekly moving average of $184.63 and with its 200-week simple moving average a major technical level of $115.41. The weekly momentum reading is projected to decline to 60.09 down from 70.65 on Jan. 15.

Investors looking to buy Northrup Grumman should place a good till canceled limit order to buy the stock if it drops to $132.21, which is a key level on technical charts until the end of 2016. Investors looking to reduce holdings should place a good until canceled limit order to sell the stock if it rises to $193.09, which is a key level on technical charts until the end of June.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.