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Jim Cramer Says Use Technical Analysis to Keep Your Emotions in Check

Jim Cramer says fundamental and technical analysis need to be used in tandem amid the coronavirus pandemic.

Keeping your emotions in check? As investors continue to grapple with a stock market that doesn’t seem to match up with the coronavirus’s impact on the U.S. economy, old dogs are seeking new tricks.

Fundamental investors, Jim Cramer included, are finding reasons to keep a closer eye on the technicals.

“It’s a highly emotional time and a lot of new investors are trying to figure out why the financials are at odds with the actual economy and the economy is at odds with the stock market…these are things that are highly emotional,” Jim Cramer said.

Here’s a breakdown of the difference of fundamental and technical analysis for investors new to the game:

  • Fundamental analysis is the main method used to evaluate the quality of an investment, using qualitative and quantitative factors to study the value of stocks and the catalysts that could impact the next move higher or lower.
  • Technical analysis on the other hand focuses more on the stock itself, analyzing past performance to identify trends and predict future moves, often with a focus on charts. 

Read More: What Is Fundamental Analysis and How Does It Affect Your Investing?

While both forms of analysis are traditionally seen as opposing forces, they can work in tandem and Cramer said it’s important that investors do just that, now more than ever.

Investors need a simple way to identify what isn’t emotional and technical analysis can help, Cramer said.

Cramer suggested keeping an eye on what as worked seasonally and where tops have been reached in the past.

“The reliance on what has happened before gives you what I regard as a grounding to be able to make decisions,” Jim Cramer said. 

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