Here are several buy levels to consider for both Microsoft and Nike

Whenever stocks of companies that we think are attractive purely on their underlying business fundamentals start selling, we know we want to buy. The question is: When to buy? Valuation is the primary factor to consider. But in a decline driven by market sentiment like we saw on Thursday, valuation isn't actually the focus of sellers; They just want to go out. When emotions drive trading, we must recognize that price action has as much to do with irrational behavior as it does with rational, fundamentals-based investing. In such environments, charts can be useful because they reflect the actions of all market participants, both rational and irrational. While it is encouraging that the S&P 500 has turned green, the damage from the previous session remains. Methodology We want to keep our work on charts relatively simple; We look for support and resistance lines based on the 50-day and 200-day moving averages, as well as trend lines and historical support/resistance levels. Momentum tools such as the relative strength indicator (RSI), which indicate overbought/oversold conditions, are also useful. Tracking volume as a way to confirm whether what we're seeing on the charts is based on a high level of activity signals how confident we can be in price action. Even if it had an ugly technical structure, we would buy shares of a company that we felt had strong fundamentals and was selling at a good value. But no matter how attractive the chart looks, we would never consider buying shares of a company that we don't think is fundamentally sound. Looking at charts can help identify important levels in advance and provide a roadmap through challenging markets. Having this road map as something to lean on can be incredibly helpful in keeping emotions at bay in a volatile market because you come into the market understanding that your plan has been laid out with a clearer head under better circumstances. On Friday, we bought more shares of Corning and Honeywell; We bought the first of these earlier this week. Frankly, we think they can be purchased here, along with the Meta Platforms we purchased earlier this week. In this analysis we use two-year charts to find some buying levels for Microsoft and Nike. Microsoft buy levels: around $500 and $465 Starting with Microsoft, shares are trading around 6.5% off their all-time highs. The 50-day moving average has not shown much support since last August. However, when the shares reached their lowest levels in early September and last week, the level of $ 495 was seen. With this level maintained, we think it would be good for members to buy shares right here and now. However, with the 50-day above us at $514, there is no need to go “explanatory buying” and get aggressive. If we pull back the 50-day (red line) moving average and see it start to act as support, you may have to pay a little more to establish the position, but you do so knowing that the stock continues to consolidate and the 50-day support area strengthens. If $495 fails, we won't find much support until around $465, where we find both the 200-day (yellow line) moving average and the former July 2024 high. In technical analysis, the Principle of Polarity states that former highs become support once broken, and conversely, old support becomes resistance once broken. A move to $465 would mean shares are down about 15% from highs and are trading at around 29 times forward earnings estimates; This is a relatively attractive valuation compared to what we've seen over the last two years. Nike buy levels: $65, $60, mid-$50s Shares are attractive around $65 here, given our view that earnings will rebound at Nike by the end of this fiscal year (ending May 2026), where we think fundamentals are improving as management implements its turnaround plan. However, we must admit that this isn't a great-looking chart, as shares are trading below both the 50-day (red line) and 200-day (yellow line) moving averages and are on the verge of forming a "death cross," which is a bearish signal in technical analysis. But as mentioned before, an ugly picture alone is not enough to deter us from what we think is a quality story. However, this does mean we need to be realistic about the possibility of lower lows, as shares have a decent amount of overhead resistance, with both moving averages hovering around $65.50. The next level of interest comes in around $60, which acts as support following our recovery from the April lows. Below that, we're looking at April lows around the mid-$50s. In the absence of any truly negative news, a move there would be quite attractive given that this level represents the highest level of trade war concerns, and we have seen good progress in executing the administration's turnaround plan since then. So, ultimately, we try to put money to work here and put down every $3 to $5 or more to build a position. Before we finish, we want to give an idea about the term "price action". When we say price action we want to take into account how the stock is trading. Is there a shift taking place that suggests investors are being too negative on bad news? Is he going bearish on good news, like Palantir did after its big earnings report that showed a lot was priced in? While others are selling, as we've seen from Microsoft, is it holding up either because it may have already taken a hit or because it represents quality and value? These are two things that are increasingly attracting the attention of investors in uncertain and volatile times. Learning to take cues from price action is another way to think about when to put money to work. Reading price movements is about interpretation, and everyone can interpret events differently, but thinking about how stock prices react to news, precedents or broader market movements, along with studying charts, can be very useful in establishing positions in volatile markets while keeping emotions at bay. As long-term investors, stock selection is very important, so we don't bother looking at the charts of companies we don't like for fundamental reasons. But in volatile times, charts can help us use money in a disciplined and methodical manner on behalf of our favorite names, taking into account price. (Jim Cramer's Charitable Trust is long GLW, HON, META, MSFT, NKE. See here for a full list of stocks.) When you subscribe to the CNBC Investment Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. 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