Little boy in fifth grade. I used to look at the new high list. I thought it was the guys hitting better than 300 in baseball. Stocks in that list, the highest of the high, obviously have something going for them. That is true when the market is in bad shape. Only the best of the best can hit new highs when the market is falling apart. So whats it tell you when a stock hits the new high . Either that its part of a genuine bull market or the company is out for serious earnings or sales momentum or maybe the sector does which is so often responsible for stocks increase. No matter how they get there, many stocks in the new high list often keep going higher because its really a list of a students worth investing in. The a students tend to repeat themselves in the process. Just luke the really smart kids in school. In a great bull market like weve had from the bottom in 2009 and any market by the way to be considered a great bull market even as they know they resist such labels, we saw the high list phenomena over and they hit new high after new high after new high. Following them is a great way to make money, even as the bears claim endlessly that market was false and couldnt be trusted. Listen together bears caused you to miss out on the great rally in history. It is mort exception than the rule over time. Things have worked well and will continue to work. These stocks typically represent companies that are fast of breed. It is integral to mad money. Im not saying that just clas stocks. That would be the foolishness. Im saying that if you want to identify stocks that will be winners in the future, unless there say big sea change in the market, caused by a gigantic political shift, looking at the biggest winners of the present is a pretty good place to try to figure out the future. Let this list do it for you. And scrubbed. Thats the thing about the market. Its not always that hard to play once you understand that there is often more continuity than change. Things pretty much go keep going the way theyre going. Unless something major shifts. And then do you have to alter course. Those courses can be radical though. And thats you always have to be reevaluating your ideas and should never dig in your heels when the facts change. Something we emphasize over and over here and also infuses my columns in real money and all my books ive written, confessions of a street addict, it isnt called mad money for nothing. But you know what . When youre looking for stocks to invest in and hunting for the bull market like i always do here, looking at the new high list is typical. I dont just pluck names because i think theyre going to keep going up. That is lazy and irresponsible. Them are negative. I dont know. Anyone that sees my insane tweets knows, yes that, is tweeting. Is that someone else tweeting who else would get up that you cant do that. Obligatory, do you ever sleep . No, not for any long stretch. I play the same standards to this show that i used at my old hedge funneled. I rarely recommend buying shots that are on the new high list unless there are special circumstances. What i do like to do when im hunting for stocks is wait for the fables pullback from the new high list. That is the best place to put money. The pullback and there im thinking about something that could be two, three, 5 . That gives you a good entry. Im not telling you to chase momentum. You should always be conscious want to sell into strength. Most people cant pull the trig wler a stock is going down. Im telling you, if its on the new high list and comes down, thats your man. Im throwing these in because i dont want you to look at the new high list as your shopping list. Its a jumping off point, a very important one for those trying to get started. Pouring over the new high list is a fabulous way to identify potential stocks to buy. You only buy stocks that pull back from the new high list if youre confident theyll come back for reasons having nothing to do with the market. You have to do all the same home work you do before buying a stock. Its not that easy. You must have conviction even if its a cynical conviction the stock is going higher. I do that for a lot of the ipos where i say cynically i know the buyers go crazy about it, i accept theyre just pieces of paper. You note big boys cant resist growth stocks. They always come to the support on down days. The biggest caveat of all when sure they havent pulled back for a good reason. The selloff is extraneous to the business. Dont buy a home builder that is down because they could at least get hurt with the courter. Dont buy a big independent oil stock whether it goes down for three straight days. That probably doesnt belong on the new high list. Look for a stock that has bristolmyers like strength. Almost nothing has to do with bristolmyers. Make sure youre dealing with a damaged stock and not a company that is going down, down, down. How do you tell the difference . If the fundamentals havent changed, the stock probably hasnt fallen from grace, it is pulled back for mechanical reasons, panic in the market in general. Now more than ever, now that stocks are traded by commodities causing stocks to triple etfs, you seat stocks of Good Companies pull back from their highs for nothing that had to do at the company. Underlying business. Those are the buys. But if the fundamental picture changes, if whatever made the stock attractive climbed the way up the new high list, the next stock is no longer a candidate. The story has to be intact or this method will let you down. It isnt a hard and fast rule, i like stocks that pull back just enough but not too much, all right, i have to tell you, 8 is the historical opt mall level of a pullback that i really made a lot of money in. Less than that, you will be early for some of them, more than that and maybe something is wrong with the stock p you just dont know. 3 , 5 , 8 , those are all important levels that 8 level, man, i made a killing when i buy them down will 8 . Bottom line, thats the first methed off cramers madness. Watch for stocks that pull back from the new high list. Some of my best picks have come out of this process. Too. Ohio. Booyah to you. Booyah right back. Better insight on mutual funds and id like to know are they a good way to diversify . Well, you know what . I have to tell you, heres the problem. A lot of people have 401 k s where you have to have mutual funds. Stocks. For that, they are. What i like to do is say 20 international, 50 im going to go 50 growth. The rest will be kind of a balanced situation maybe a fund that has some bonds. You have to depend on your outlook and your age. But, yes. Mutual funds are fine. Try to look at the Performance Records in morning star. Thats what i use. Stewart in florida. Caller jim, what is the best time to use stop orders after that. Actively, we have to Pay Attention it to. Were going to invest. We dont need stop orders. Fwlash day. It bounces right back. We dont play it that way. We invest on mad money. Were not traders. We invest. There is a methed to this look for stocks that pulled back from new highs, especially selloff having nothing to do with the individual stock that you want to pull the trigger on. Stay with cramer. Dont miss a second of mad money. Follow jimcramer on twitter. Have a question . Tweet cramer, madtweets. Send him an email or give us a call at 1800743cnbc. Head to madmoney. Cnbc. Com. Welcome back to tonights methods to madness special. Im revealing the best tricks for buying and selling stocks. Next up, how do you find stocks earlier i was talking about picking off stocks that have list because you get a cheaper i said you didnt want to buy list because youre paying too much for them. You can usually get a better deal if patient and wait for weakness, maybe down 5 , 7 . Given how volatile the market is, there are very few occasions where buying a stock right off the new high list or that close to it is justified. Sometimes the stock is so high you just have to buy it whenever you can, as soon as uk it may not be going lower any time soon. You wont find these often. But whether you find them, you have to remember not to buy all at once. If you want to buy 100 shares of stock, you think it has so much mojo it wont get a pull back, then buy 25 shares. Worst that happens, it goes higher, you dont get to buy more and you grab a quick profit. There is always another stock to find. Ive got an exception where it is okay to buy a stock right around the high. If you see insiders buying the stock when stocks are up a lot already, im going to give you a total buy, buy, buy, green happen. But in my experience, its rare still that this method of picking stocks doesnt work out. See, i love it when insiders buy after a decent run. Thats a great sign of confidence that they think the vun just beginning or there is a big runway ahead. And they are sure that its long lasting. Remember, you cant flip a stock if youre an insider buyer. You have to wait six months. Government takes await gains. Its the law. These people are seeing things that they like that arent going to disappear in six months. Normally insider buying ranges from being meaningless to a small but on its own insufficient reason to buy a stock. A lot of times you catch insiders buying the stock, they want to give the impression of confidence, create an illusion theyre doing better than they are. Insiders arent stupid. If they are seen buying their stocks, the market will smile upon them. They play the system. Hey, thats fair. But it means we ignore most tiny be kind of flimflam. Tape. Kind of makes it look better than it is. That said, when you get truly colossal insider buy, you may want to take another look at the stock in question. It is powerful endorse. When the insiders buy a whole lot of stock. Its really the volume of the insider buying that declares the sincerity. But were only focusing on one sort of insider buying, stocks perceived as being cheap or low dollar amounts. There is nothing more arrogant and telling than whether an insider backs up the truck for his own stock whether its been rolling along at a pretty good clip. There say, yeah, we know we rock. Our stock has been enffuego and were going to buy some shares right now. Werewaiting for a pullback, no, were buying right here. This is bankable. I see it all the time. Corporate insiders are not fools with notable exceptions. If the stocks are on a terror, let as assume theyre buying and they do know something. Not everyone deserves the benefit of the doubt in this business. After the financial crisis in of 2008, i know that a lot of people think that all c. E. O. S and executives for that matter are a bunch of crooks, frauds, and mall banks. Especially those running the old fannie mae or lehman. Healthy skepticism is one thing. A total unwillingness to believe in anything positive is Something Else entirely. If youre going to own stocks, you need to be willing to extend some measure of trust to the people who run the companies that you own shares of. What else could be going on to spur buying . We had a massive amount of consolidation in a host of industries of late. Airlines, rental cars, foods, telecommunications, enlts takenment. Perhaps theyre buying stock because they hear the footsteps. Maybe theyve been contacted by some other company and turned that company down. They happen all the time f executives expect they may be next, it could be a healthy and honest reason to buy. They have to disclose anything that is a serious bid. And say, no, bye. They do that because the company is worth more than they thought. Maybe they think the company could be broken up. Like the old tyco or fortune brands. Maybe you see them create value and they just want in on it themselves. They dont it this run is over because they recognize how much better the company will be whether divvied up. Well, for us, buying after big runs can be a bit reckless and lazy. Most investors are smart enough to wait for a pullback before they pull the trigger. Insider buying after decent runs tells me they dont think there will be a pullback and there is nothing more bullish than. That sure i want to wait for a pullback after they bought. That is the best of all possible worlds. You usually dont get that one more methed off the madness, when you see insider buying of a stock that had a solid run, you want to be buying, too. Caller jim, steeler booyah to you. All right. Why not . Whats up . Caller jim, i have a when the fed raises interest rates, Good Companies with lyn rapidly go out of favor. Can you add some clarity to why . There, bob. Once they see rates go up, they a while. If thats the case, they want to being a risky yield and go into what is a certainty which is a bond yield. Rick in california. Rick . Caller booyah, jim. Booyah, rick. Caller how do i add to a position if the stock hasnt gone down to the average list price . You cant. Id say the vast majority, not just a few times, the vast majority of times we pay up above our basis. Well, i got to tell you, sell, sell, sell, you got the picture. Remember, heres another method of my madness, when you see insider fwhig a stock that already had a big run, think to yourself, i might want to buy make you even more money. I think we shouldve taken a left at the river. Tarzan know where tarzan go tarzan does not know where tarzan go. Hey, excuse me, do you know where the waterfall is . Waterfall . No, me tarzan, king of jungle. Why dont you want to just ask somebody . If youre a couple, you fight over directions. Its what you do. If you want to save fifteen percent or more on car insurance, you switch to geico. Ohhhhhh do you have to do that right in my ear . Ive been on my feel all day. Im bushed yea me too. Excuse me. Coming through ride the gel wave of comfort with dr. Scholls massaging gel insoles. Theyre proven to give you comfort. Which helps you feel more energized. All day long. I want what he has. Theres a more enjoyable way to get your fiber. Try phillips fiber good gummies plus energy support. Its a new fiber supplement that helps support regularity and includes b vitamins to help convert food to energy. Mmmmm, these are good nice work, phillips the tasty side of fiber, from phillips. Man sternly where do you think youre going . Mr. Mucus to work, with you. Its taco tuesday. Man youre not coming. I took mucinex to help get rid of my mucusy congestion. Im good all day. [announcer ] mucinex keeps working. Youre in luck. You called cramer on a good night. Im not going home to sip that cheap scotch on my dirty floor. By the way, i have to apologize to dewers. I wouldnt suggest it was the linolium scotch of choice. It is actually good stuff. Have you had 18yearold jamiesons . Dont waste that one. No, tonight im in a great mood. Im at my best. Lets say im productive when im in high gear. Madness. Pull pencil and paper. Start jotting things down. I have to tell you something that could be incredible useful. Better than give me some stock picks. Im giving you the best ways i know to pick stocks. Im teaching you how to invest and trade like cramer. Its not to be like me, i have a emotional things cooking here, but at least emulate me. I mean, you know . So far i have given away two secrets. Two of the tools i used in my hedge fund and my travel trust where i play with an open hand, allowing subscribers to see all my trades before they happen. I look for stocks that have pulled back from the new high list. That is not a reason to buy in itself. But its a great place to look for potential buys. I like to buy stocks that had big runs, yet, still have substantial insider buying. It says that people running the Company Really believe the stock has legs and that they believe there is a could be a good reason for us to believe, too. But, again this is alone not enough to recommend the stock. You have to make sure you like before you dive in and buy. What im teaching you to night are what i call tells. Thats right, theyre tells. Theyre signals that a stock might be worth owning. Its worth your time and effort to go through the boring process of reading through the Conference Call transcripts and quarterly filings. There are thousands of stocks out there in any method we can use to narrow down the ones that might be attractive is a method worth having. We talked about insider buying at the high. I dont use it as the only way to determine whether or not a stock has got it going or not, there is one other scenario where insider buying makes for incredibly bullish tell and that is whether a stock has a heavy short position. Meaning, a lot of people out there are borrowed shares, sold the shares, and are now waiting for the stock to go lower before they buy back the shares. Return them to the bank they borrowed them from and collect the difference they sold at first and the price they bought the stock back later, hopefully they sold it high and bought it low. Think of shorting as regular investing much its in reverse. We try to buy low and sell high. Shorts turn that around. They sell high and try to buy low. Whether a stock has a lot of conviction. Conviction is the stock is only going lower. It takes more conviction to short a stock than go long. Wall street speak for buying a stock, because when youre short, the potential down side is infinite. When youre long, it is zero. Shorts lose money when it is higher and higher, there is no win. Short sellers and there say lot of them and a stock gets some good news, we get what is called a short squeeze. And it sounds exactly what it is. To bail or close out the buy. There is called covering. Same time in a panic, the stock will surge because what you really have is a lot of people desperate to bite stock. A lot of demand. They have to buy unless they want their years wiped out as short sellers had in the last few swoons when the market refused to quit and went right so where does insider buying fit into the short selling . Short interest. That is a sign that much of the flow to sell short. Then some people that run the Companies Start buying shares themselves or cocacola with green mountain, sanlta fay, takes more than a 10 stake indicates it wants more. Those are three situations where the shorts kep shorting and they got crushed. They should have done buy, not shorting. Its almost like drawing a line in the sand for the shorts. Our stock goes this low and no lower. This is an explosive combination of that kind of insider buying and a stock that is heavily shorted, one that often leads to a short squeeze that sends the stocks much higher. Shorts are smart. In fact, a lot of them, a lot of the time they send to be real smart, much smarter for the most part, i found, than what we call long side investors. They dont know more about a business than the insiders who run it f a lot of people are shorting a stock and management is buying it in sizable amounts, not just in hundreds shares worth, you should do home work and usually youre going to want to decide from. And higher and higher and i regard the santa fe and cocacola buys and monster as being inside light buys. The shorts panic, push the shares higher in a desperation to cover the positions and you make money. When a company with a heavily shorted stock announce a buyback, thats another line in the sand situation where management is contradicting the shorts. Companies often repurchase their own shares and why not all buy backs are bullish, some are wastes of money. I teach you how to identify the bogus buybacks in my travel trust bulletins that i issue multiple times each day. A new buyback is often a good reason to take a closer look at the stock. You have to be very careful whether dealing with a company in the cross hairs the shorts when people are nervous and the market is in bad shape. Shorts have the ability to wreck the stock. Even if the fundamentals are fantastic. These days the shorts have more firepower than ever thanks to an sec that under both democrats and republicans looks the other way when shorts raids stocks with bogus storyies about accounting issues an management blunders. Its easy to do as a stock owners no longer have the benefit of rules that slowed short selling down and made it harder to create bear rates. An uptick or higher price before can you sell short stock. That was a good rule. Somehow the government got talked into a a. Bollishing in order to make traileding quicker and more fair for the shorts. A lot of good that did for us. Its a leading reason why so many home gamers left the building. We establish these rules in order to stopt panic, something that happened during the great depression. The government and all the wisdom seems to it this panic is no longer possible. We have to be more careful than ever not to succumb to panic. That has been orchestrate bid short sellers who need prices to go lower. Without the protections, the shorts are able to run wild and assassinate the stocks of many aggressive negativity in and again after manufacture the big times using weapons of mass destruction like double and so when youre dealing with a heavily shorted stock, you have can you still find great opportunities in the stocks where the shorts overreached and insiders are buying, i have to warn you, the balance of power shifted in favor of the shorts against regular individual investors. That means even if the short sellers are wrong short term about a companys prospect or long term, they can still demolish the stock, especially if they now campaign against the stock like with herbalife. He was taking on the company and buying back stock and managers on the other side of it, dont underestimate the amount of damage the shorts can do. Although remember, the best protection against these rates is offered from stocks that pay good solid dividends, short short the stock. And that means they have to pay the dividends to the real owners. Thats a terrific deterrent from those pernicious in the way they go about shorting. When you see a stock with a big dividend 5 00 tacked by shorts and dividend is going higher, a terrific place to be, especially if theyre snapping up stocks inside, too. Insider buying plus heavy Short Interest can equal raging buy as long as you avoid situations where the shorts are determined to question the stock at any cost. Like herbalife. Lets go to herb in florida. Herb . Caller jim, great to talk to you. Im on action alert follower for the past few years. Wish i got onboard a lot sooner. Youre very kind. Tough days, i like that, though. You support us, thank you. What is going on . Caller im recently retired. I saved up well over my lifetime and ive looked at the longevity of my savings and as long as i manage things well, im in good shape. Good. Is an allocation. I have about 65 right now allocated in stocks, split about half way between what i follow you with and the other half in index funds. Okay. Caller and then the remainder is split between bond funds and cash. You know, the cash fluctuates up and down. Sure. Youre doing exactly right. Just like we teach you in action alerts. Then. Caller thank you. You got it dead right. Youre doing exactly what i like number criticisms of anything i that all right. Trying to spot a raging buy . When you see insider buying plus heavy Short Interest and then a buyback in a dividend, wow, you got something. Just be careful and avoid situations where the shorts are simply determined no matter what to crush not just the stock but stick with cramer. Im going to share a photo of my eggo waffle when it pops up. Thats so interesting honey because im going to share a photo of my eggo waffle when it pops up. Leggo my eggo leggo my eggo answering machine hey leave a message. Hi, i know youre there, cause i can see you. Im calling you to tell you to leggo my eggo anncr some things are too delicious to share. Golden crispy, warm and fluffy eggo waffles. Leggo my eggo. Choose to move freely. Move free ultra has tripleaction support for your joints, cartilage and bones in one tiny pill. Move free ultra. Get your move on. And now try move free night. The first and only 2in1 ive been on my feel all day. Im bushed yea me too. Excuse me. Coming through ride the gel wave of comfort with dr. Scholls massaging gel insoles. Theyre proven to give you comfort. Which helps you feel more energized. All day long. I want what he has. Janet . Cough if you can hear me. Dont even think about it. I took mucinex dm for my phlegmy cough. Yeah. But what about mike . It works on his cough too. Cough it works on his cough too. Mucinex dm relieves wet and dry coughs for 12 hours. Lets end this. cell phone rings where are you . Well the squirrels are back in the attic. Mom . Can i call you back, mom . He says its personal this time. If youre a mom, you call at the worst time. Its what you do. If you want to save fifteen percent or more on car insurance, you switch to geico. Its what you do. Where are you . Its very loud there. Im all about trading. I dont have any advice ready for regular investors. This show has adjusted over time. Its morphed, so to speak. It is about longer term investing and not trading. If you watch any time in the last five years, you know. That however, knowing how to trade certainly can make you a better investors. Trading around the core position is one of the most basic and useful disciplines out in. Many people asked me about whether what i do mean by . In markets like this one after very big considered runs since we had 2009, it does help to trade around. What does it mean to trade around a core position . First you need a stock. Pick one you like, one you have one you have a bias and really want to buy as it goes down. Finding a stock that you believe will be going higher over the long term is what matters even as you accept the fact it could go down in the near term. What you really looking for is a Great Company with a stock that could get tossed around by market volatility but you believe will get higher if youre patient. If you were just in vesting and sets up a position in the stock, buying in increments because we all know that buying all at once is arrogance and thats not going to be allowed on mad money. Use google as an example. I like that stock very much. Over the long term will i tell you that i like it because its very volatile short term. Lets say you want to own 100 shares of google over time. The way to set up that position is buy 25 shares four times over a period of weeks, or even months. That is the core position as an investor. Say you want to trade. I know many of you want to but you feel discouraged because you remember how all that amateur day traders, member the day traders that got blown out whether the tech bubble burst . The key word is amateur. You gamers can make money trading if you do it right like a professional. In the old days, whether commissions were higher, that commissions would eat at your profits. So lets come back to the core long Term Position strategy. You own 100 shares of google and you want to own it long term. Lets say its trading at 500 a share. Every time the stock jumps 25 points or 5 , if you want to trade around position to preserve capital, you might want to sell 25 shares. You shave a little off to bring in some profits much once google reaches 525, you own 75 shares. You keep scaling out the same way although always i love the stock. I like to keep that last 25 shares. Then you wait until something to where you bought it as long as the news is in specific to google, thereby damaging their were in a world that they can get crushed by factors that have fundamentals, you buy it back in increments. Since we started with 100 shares, keep using increments of 25. If they come back from to shares. Thats if you sold to 50, not just 25 on the way up. Take the winnings this way and help buy 25 more if it keeps going lower. You only got to swell 25 before the swoon. This might appear to be small potatoes, up 5 to sell 25 , down where you started 25 shares and repeat the process on the way back. Up r over time, profits add up. You dont have to do anything. You can just hold it. That is fine with me. People ask about what trading around the core position, is thats what its about. They say trading is exciting, but if youre good at trading around a core position, its right to be bored. There is nothing exciting about the plan i laid out. All youre doing is watching the stock, trichling up or adding to your position. Trading around a core position is really the how to have a prudent portfolio adjustment. Boring is, good exciting, save it for the stadium. This works best with stocks at lower prices where you can buy more stock and have more room to buy more. But i want to show you that it 500 stock. Even if you own a stock and you like it, you dont need to do anything. Questions in twitter about how i used to trade whether i was at my hedge fund, trading around a core. You can scale the numbers depending on how big the position s the basic idea is to avoid putting your snefl a spot where you have too much on the table in case the stock gets the table to take advantage of trading around a core position is an important basic trading strategy that you can use even those of you who find the notion investing to be boring. If you take the trade together there are two chapters on options in getting back to even for the strategy i used in my old hedge fund. I used to think the options to action that some of the material i no longer think. That you have to put in extra home work. Than worth the effort, the stock to be google, and you can see how my strategy wlaf i call stock replacement and getting options than with the common stock. Its like a keeper and less risky way to creating a google at a more reasonable dollar sells at. This stuff is hard. Im reactsing to the requests i get all the time on twitter, ongss strategy. You cant use options for action owners, so im old time on this theyre all there for you to use. By the way, if you dont understand options at all let alone the strategies i lay out in getting back to even, in my firsthand book real money, thats a compilation of what i taught people that work at my hedge funneled, i have what an option is. Bottom line. Now you know the basics of how to trade around a core position if youre so inclined. Get another method to my madness, one that allows you to generate lots of small gains that add up over time. Dont need to do it, but now you stay with cramer. If youre approaching 65, nows the time to get your ducks in a row. To learn about medicare, and the options you have. You see, medicare doesnt cover everything only about 80 of your part b medical expenses. The rest is up to you. So if 65 is around the corner, think about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, they help cover some of what medicare doesnt pay. And could save you in outofpocket medical costs. So dont wait. Call to request your free decision guide. And gather the information now to help you choose a plan later. These types of plans let you pick any doctor or hospital that takes medicare patients. And theres a range of plans to choose from, depending on you needs and your budget. So if youre turning 65 soon, call now and get started. Because the time to think about tomorrow. Is today. I got one more trick to teach you. One more method to my madness. Selling. Sell, sell, sell. Buy, what price you buy may be most important and undervalued tool. How do you know whether to sell party ends so that youre not one of the last people around who gets stuck cleaning up the mess . This is a question that needs to be answered because theres a hot stocks with lots of momentum. To leave the table. Eventually the naysayers are later virtually all hot stocks implode except for the ones that over time are able to develop into multiple business streams. This topping process happened big in recent years with stocks as diverse as chipotle or the cloud or smaller biotech stocks. It usually occurs later rather than sooner. The negative talking heads that actually cost you great opportunity to make money. People shy away from the stocks because they dont know where theyre going to top out. Thats understandable. Id ab frayed to buy them too, if i didnt have a disblin that let me know whether to get out. Lucky for you i do have one. And youre about to learn it. First, when im talking about hot stocks, i mean hot speculative stocks, stocks in companies with low market capitalizations. Usually the stocks begin with very Little Research covers from the major wall street brokerage houses. They can goup for a very long time. Fire for years without sponsorship. When interest peaked and time to sell is watch the Analyst Coverage rolling out. You have to use your own judgment. Once of the hot stocks gets discovered and has a half dozen Analysts Covering it, then the run is going to begin to peter out, not get stronger. Because it is going to be too big and too well known to continue to go up the way it has. Its the rare stock that doesnt behave this way. You can find out how many guys are on a stock by looking at it anywhere on the internet. This isnt hard to find information. This formula worked for me for as long as i can remember. As far as i can tell, it works because the number of analyst onz a stock is how much interest there is in a name. And names dont get high followed and pushed by everybody. They got hot because they get discovered by everybody. Hot stocks get tapped out. When theres nobody left to be attracted to them. When all the people who would be interesting in buying them have tracting more and more attention, more and more backers and eventually everyone who wants a piece of the stock has a piece of it. When that happens, the run is over, people, and then you must ring the register and go home. Let me give you a great example, hanson natural, the old monster beverage. That was the old name. One of the hottest stocks in 2004 and 2005. Split adjusted, they went from 18 and change to beginning of 2005 to 200. The whole way up people were telling that you hanson, a Beverage Company that got the momentum from the Monster Energy drink was a fad h to dry out. Had to crash. Well, it did do that, but as often as the case, it took years for the momentum to run out, not days, not months, not weeks, years. I called the top in hanson back then. I know how the stocks work. It peaked in july of 2006. This was in part because of the fwakt that the company did a five for one split. Even though splits with not supposed to do anything this encouraged people that had were the table. Ill tell one or two shares. There was another reason i believed it would peak, and that was it picked up the fourth analyst may 10th of 2006 when Goldman Sachs started covering it. You had two months to sell between Goldman Sachss initiation and the stocks peak. There was still upside left after Goldman Sachs started the coverage. Prudence dictated that we sell once the stock had four analysts on it. Better to clear out early with the winnings than to wait for them to fade away. Hanson, was pretty much all of the other stocks, hot stocks started to cool off once it that critical massive Analyst Coverage. Incredibly, after hanson fell off the radar screen, people stopped talk bigt and Analyst Coverage dwindled again and then ultimately cocacola bought a huge stake in the equity which sent it up further. It was an mazing republican sons. Again, a testament that whether analysts stop following a company or do sell on a base thas the companys earnings start percolating again, as was happen. It turns out that the fad drink ended up helped the bigger soda brands. Again as Analyst Coverage gained, the stock, once so many analyst covered it, it peaked. They dropped it, it bottom. Bottom line, small speculative scheming hot momentum stocks are worth owning. You must know whether to sell. That moment comes when you see too many analysts jumping on the band wagon. Knowing whether to start selling. Stay with cramer. Were here to make the very best product in the world that enrich peoples lives. Every time we raise the value for shareholder, we raise value for our people. Its not about making money, fwz serving customers. The result you is make money. Mad money, invest in what matters. But with my back pain i couldnt sleep. Then i found aleve pm. Aleve pm is the only one to combine a sleep aid plus the 12 hour pain relieving strength of aleve. And now. Im back. Aleve pm fora better am. Your heart loves omega3s. But the omega3s in fish oil differ from megared krill oil. Unlike fish oil, megared is easily absorbed by your body. Megared. You set rules around the house, right . So set rules for your kids when they go online dont be a cyberbully. No racy selfies. And remember everyone can see everything you post, even grandma. Rules keep kids safe online. You got to get some tweets youve been sending me jimcramer. The first tweet is looking to use technicals more, what are resources you recommend for Technical Analysis and indicators for the novice. I get most of it from realmoney. Com. That is something i did in get rich carefully, pick the best these terms mean and then show what i did in that book. Next, tweet from redsquare27. If im trading my roth, should i have my money in an index fund, stocks or both . Stocks, my friend. That is not the case with 401 k which is why i like the ira option so much more. Next, haulgthal. I watch you daily for over ten years. Daily. You helped massive amounts of people. Thank you. I cannot tell you there are so many people who come up to me and they apologize that they want to tell me that they like the show. Excuse me, jim, i dont want to bother you, i like the show. No, when you say excuse me, you usually think youre about to , boom. Dont excuse yourself. Im absolutely thrilled that you say you like the show. It means the world to me. I sometimes figure what the heck do i come out here every night for other than the fact that you clearbaffles. Okay. Please discuss balance between adding to a position and selling cost basis or cost average. I like the lower the basis by selling what i do is as the stock goes down, i buy. Then as the stock goes up, i like to selt higher basis, market. I run a traveler trust. But i typically what im trying to do is lower the basis as an owner. Why i do want to lower the base basis . I dont like chasing and i like buying at a discount. I get a company that i like at a cheaper price than i got it before. The funneled. Als are still good. Next, you have more followers than wyoming has people. I like your stock advice better, too. Wyoming has more oil than i have. Wyoming wins. I have a long list of Research Companies i like to invest in how do i narrow the list . This is easy. What you got to do is figure out, okay, which of the best at which levels . If you like them all, try to figure out what level would be the one where you really want to buy something . And then stick by it. Once stock is coming down, people run from the levels instead of to them. Stay with cramer. Stay with cramer. Degree gave women a motionactivated wristband to understand how much they move,. And created degree with motionsense. The worlds first antiperspirant activated by movement, it has unique microcapsules that break with friction to release keeping you fresher with every move. Motionsense. Protection to keep you moving. Degree. It wont let you down. A heart attack doesnt care if you run everyday, or if youre young or old. No matter who you are a heart attack can happen without warning. If youve had a heart attack, a bayer aspirin regimen can help prevent another one. Be sure to talk to your doctor before you begin an aspirin regimen. There is always a bull market some. Where i promise to find it just for you right here on mad ill see you next time. Its wednesday, february 17th, coming up on early today, the republicans are feeling the pressure as the clock winds closer to the South Carolina show down. And president obama lays out a bold plan to nominate his successor to the Supreme Court while taking direct aim at donald trump. A rare moment of pope francis losing his cool and the reason why as he greets the faithful. Plus incredible images of a driver going straight into a wicked tornado. And a World Class Athlete and meet c. J. He beat out more than 3,000 dog fweez names it be named best in show. Early today starts right now. Closing in on the South Carolina primary, republicans push back against critics. In the latest poll, the donald has a 12 point lead over sepnator ted cruz and jeb in a disappointing fourth place trailing marco rubio. President obama weighed in on the race and a direct shot at the frontrunner, donald trump. Being president is a serious job. Its not hosting a talk show. Or a reality show. Its not promotion, its not marketing. Its hard. And this is what mr. Trump reacted to when he was told of