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

CNBC Jim Cramer reviewed Friday’s market action and called the session an “exquisite moment,” where stocks opened weak, but averages rose at the close. While he said this particular moment has come and gone, he listed ways investors can recognize it in the future, saying these conditions can lead to big profits.

“We used to call days like today ‘exquisite moments’. Those are times when bears overdo it. They get ahead of themselves because they don’t know when to give up,” he said. “We had one just this morning.”

After a difficult week on Wall Street, the Dow Jones Industrial Average fell 1,100 points in a single session and recorded its longest losing streak in about 50 years: the index bounced on Friday. The Dow Jones, made up of 30 stocks, gained 1.18% to close the week, while the S&P 500 rose 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 shows when there is too much buying or selling. Cramer added that these “exquisite moments” appear when bearish investors demonstrate “overconfidence,” and said Friday saw key stocks like Palantir, Apple and NVIDIA reject at the beginning of the session without a clear reason.

Investors should also watch for positive data on the economy when the market is oversold, Cramer continued. He suggested that some of Friday’s bullish action was due to colder numbers from the personal consumption expenditure price indexto key metric for the Federal Reserve. Finally, he said, news that counteracts a catalyst for the slowdown is also something to watch out for. Investors balked after the Federal Reserve indicated it would make fewer rate cuts next year than expected. But on Friday, a Federal Reserve official said he was encouraged by the PCE report and said rates could still go lower, even though the central bank remains cautious.

“It was, indeed, an exquisite moment this morning,” Cramer said. “They don’t appear very often. But when they do, you have no choice but to attack.”

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