Cramer explains how to spot ‘exquisite moments’ like Friday’s session

CNBC’s Jim Cramer

reviewed Friday’s market action, dubbing the session an “exquisite moment,” where stocks opened weak, but the averages climbed by the close. While he said this particular moment has come and gone, he listed ways investors can recognize one in the future, saying these conditions can yield big gains.

“We used to call days like today ‘exquisite moments.’ Those are moments when the bears overreach. They get ahead of themselves because they don’t know when to quit,” he said. “We had one this very morning.”

After a difficult week on Wall Street — the Dow Jones Industrial Average dipped 1,100 points in a single session and posted its longest losing streak in about 50 years — the index bounced on Friday. The 30-stock Dow gained 1.18% to close the week while the S&P 500 climbed 1.09% and the Nasdaq Composite added 1.03%.

These “exquisite moments” occur when the market is oversold, according to Cramer. To discern market conditions, he said he uses MarketEdge’s S&P Oscillator, which displays when there is too much buying or selling. Cramer added that these “exquisite moments” appear when bearish investors demonstrate “overconfidence,” saying that Friday saw key stocks like Palantir, Apple and Nvidia decline at the start of the session without a clear reason.

Investors should also watch for positive data about the economy when the market is oversold, Cramer continued. He suggested that some of Friday’s upward action was owed to cooler figures from the personal consumption expenditures price index, a key metric for the Federal Reserve. Finally, he said, news that counters a catalyst for the downturn is also something to keep an eye out for. Investors balked after the Fed indicated it would make fewer rate cuts next year than expected. But on Friday, one Fed official said he was encouraged by the PCE report and said rates could still decline, even though the central bank remains cautious.

“It was, indeed, an exquisite moment this morning,” Cramer said. “They don’t come along all that often. But when they do, you have no choice but to pounce.”

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Nvidia and Apple.