nobody wants to miss a rally. >> moo! >> if you sold every stock you owned right before a huge up day, you would feel like an idiot and a loser. you'd be kicking yourself for months. me, i'd hold it against myself until the day i died. ♪ hallelujah but let's look at this another way. you're in stocks for the rally, they have great gains, but you don't do anything. you let them ride! >> all aboard! >> and then gradually your stocks come back down, maybe back to their price before the rally. or maybe lower. if you do that, you might as well have missed the rally entirely. making lots of money on a great day is fabulous! it's why many of you are in the game. but you can't view a rally as just a day or few days where you make a lot of money. you have to see it as a time to take some action! >> sell, sell, sell! >> even if you don't fancy yourself a trader. and try not to time the market

or make many trades. if you're like that, make an exception for the good days, and i'm going to tell you why. don't get me wrong, a big up day is something that should be celebrated. >> house of pleasure. >> and, remember, the next time we get hit with a nasty downturn, and you want to sell everything and give up, well, this will keep you in the game. but just as you want to remember the good days during the selloff, you also have to remember that there will be more selloffs in the future. when the market is gray. you have to approach every rally with a grain of pessimism. about what's coming next. look, it's the hardest thing to do. i have spent a career trying to get that grain of pessimism, because it flies in the face, right in the face, actually, of how we're feeling. when we watch all of our stocks

go up and all the talking heads -- myself included -- i've made this mistake, indulge in the euphoria of winning big. there's nothing wrong with feeling good about a rally. as someone with violent mood swings and a habit of reaching, of course, for the cheap stocks, not the cheap stocks, the cheap scotch and heading straight to the dirty linoleum floor. memo to -- some key names that sat with me on the linoleum floor. when we get a really bad tape, look, i know the value of being able to celebrate your stocks. euphoria's fine. as it doesn't lead to complacency, which is the enemy of every investor. when a big up day, yeah, a great opportunity to sell a lot of stocks into strength at great prices, i regard rallies as, well, that great opportunity. but we can get swept away by the positivity. i know. i've done it. when the market's up and everybody's optimistic, the last thing most people want to hear

is selling. everything seems so great. how could you ever want to sell a stock? it's one of the many situations where your emotions, they need to be checked. they are going to get in the way of making the right decision and making as much money ultimately as you want to. the exuberance is enough to make you forget the most basic maxim in investing, and that, of course, is buy low and sell high! and so you end up sitting back and watching your stocks go higher, without a care in the world. i am telling you that no one ever made a dime panicking -- >> no, no, ahhh! >> and no one ever made a dime being care free. >> buy, buy, buy! >> the trouble with rallies is they encourage you to do the exact opposite of what you should be doing. you hear it? >> buy, buy, buy! >> buy, buy, buy! >> buy, buy, buy! >> you want to watch the gains roll in. you feel like selling a stock is nuts, because it won't -- what if the rally keeps going? i mean, won't you leave a lot of money on the table? it doesn't matter.

we sell into strength here in "mad money." we sell into strength in cramerica. but we also never sell all at once. take some off. and if the rally holds up, sell a little more later. sell when it's scaling up. and, remember, your gains are all on paper. you don't have a real gain until you ring the register. my rally playbook is about what stocks to sell and why. that's how you take advantage of a rally. the name of this game is preparation. it is not -- >> that was easy. >> -- just the opposite. there's no real way to prepare for a rally other than by owning stocks. i'm talking about preparing yourself for the bad days and the really bad days. >> the house of pain! >> it will definitely come after the big rally! >> the house of pain! >> the best time to adjust your portfolios so that you're ready

for the next sell off is during -- >> the house of pleasure. >> -- the house of pleasure moment. and that's why you have to approach the rally with caution, not with unbridled enthusiasm. when the dow is up 200 to 300 points in a day, i don't think, wow, this market is great, what a time to buy. >> buy, buy, buy! >> no, i think about -- and get ready. after i calm myself down and maybe bite off the heads of some of my little bear toys -- look at this, a chinese death bear toy, painted. ooh! okay. constant theme. i think about what i'm going to need when the market goes south. and i also consider what you can do for your portfolio today. the day of the rally. that you couldn't do yesterday. the answer to both questions involves selling. but i don't mean selling everything. that would be nuts. takes one. you know on this show we believe in buying and selling stocks incrementally. during the rally, you'll want to sell in bigger increments to get those great prices while they last. in the rest of this show, i'll go through the whole "mad money" playbook! could that possibly be related to one of the books that i've come up with? "stay mad for life"?

maybe. we're playing how to sell and why you're selling it. but right now the bottom line's pretty easy. don't get carried away by optimism when you find yourself in a big rally. keep your head on straight. focus on the long term. and remember me on that cheap linoleum floor drinking some cheap scotch. more of my "mad money" rally playbook is coming up. but let's take a call. let's go to the home state of pennsylvania. let's speak to jeff. jeff? >> caller: hey, jim. >> how you doing, jeff? >> caller: a question for you. before my question, i just want to thank you. i want to thank you for that day a while ago when you made an intentional decision to not just have a job, not just to make -- have a career, but to leave a legacy behind. the legacy that's bigger than yourself, man. >> wow, thank you, jeff. i know, i often ponder, why not just go back to being a hedge fund manager? boy, i tell you, that's like, whoa! but you know what, maybe there's something else to it. maybe there's something else to life. so i appreciate that.

what's on your mind? let's make some money together. >> caller: absolutely. absolutely. hey, i got some stocks i think a part of a seasonal rally. how can i tell whenever they're definitely just part of a seasonal rally and whenever it's more of a long-term trend that i'm following. >> great, great question, because i've been faked out by seasonal rallies at labor day. i've been faked out at the so-called beginning of summer rally. i've been naked out by the day after thanksgiving, what a monster good day that is. i've been faked out by the christmas rally. now, let's understand each other. we know when the calendar says it's going up, so why not ready ourselves with a little excess stock going into what's supposed to be a seasonal rally and we take it off either way? if we don't get it, we sell that stock. if we do get it, hallelujah. but we need to be ready, and we need to recognize that those days are artificial and we sell artificially up days in cramerica. don in new jersey, don! >> caller: booyah, jim. >> booyah, chief.

>> caller: hey, you taught us bull makes money, bears make money, but pigs get slaughtered. you've said that numerous times. you've also shown us that there are times to sell stocks after they've made us lots of money, even though they're doing well. to help us make these decisions ourselves, what objective indicators do you use to suggest when the time is right to take some profits? >> all right. i like to use a thing called the oscillator here. i'll rely on the proprietary s&p oscillator. the s&p company has an oscillator that i think is the best. i also like thestreet.com's, they do a great job. but i use the s&p in part because i've been keeping track of it for years and years, when that thing gets to plus five, which means we see a dramatic increase in the at of buying over and over and over again, too much buying. i say, i don't care. i don't care how great it looks, i am leaving the table. as we get more of what is known as overbought from there, i sell, sell, sell, because that's when i'm really scared. how about chris in michigan.

chris? >> caller: hey, great big lansing spartan booyah for you. >> that's a good one. i always like a michigan state booyah. >> caller: i'm a 26 years old, and i've got a good six-figure portfolio. >> good for you, my friend. >> caller: thank you. >> the 26-year-old understands the game and takes big risks because you can do this when you're younger. this is why i'm not discouraging older people from taking risks, but that's fabulous. what's up? >> caller: the solar stocks are a lopsided portion of my portfolio. do i really sell to rebalance? i'm young. i can handle the risk. i'm far from retirement. and i'm bullish on solar and the rest of my portfolio is pretty diverse. also if i sell, do i wait a few months so i don't take capital gains? >> you are totally at the crux of two of my disciplines and it's the most difficult question to answer, which we like to be diversified, which is pure nirvana, but it's also hard to find winners, because of your age and your youth, instead of selling half, i would sell a quarter and hold out for more.

if you were in your 30s, sell half, if you were in your 50s, i would sell you something, i would try to get all of my money out and play with the house's money. i guess i'm violating a little bit of a rule because you're 26. because normally i want to play the house's money as we go higher. let it run a little, but, please, in the end if you really catch more than a double and you haven't sold half, you're not from cramerica. the "mad money" rally playbook, how to maximize the big up day, more ahead. stay with cramer! cramer's gone mobile. now get "mad money" on your mobile phone. cramer's top stories, "lightning round" to go, "mad money" videos and more. all that, plus cnbc's free real-time quotes. go to mm.cnbc.com. miss out on some "mad money"? get your "mad money" text alert today. text mm to 26221 to get cramer right on your phone. for more info, visit

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when i decide to put together a show entirely about how to handle a really terrible, awful, no-good, very bad day in the market, my selloff playbook, everyone i talked about thought the show was a great idea. when the market's down a lot, a lot of investors freak out. they panic. >> no, no, ahh! >> they want to panic. many don't know what's gone wrong. few can easily handle the trauma -- >> house of pleasure. >> -- of the -- >> the house of pain. >> they don't know that the house of pleasure may be beckoning. >> the house of pain! >> almost everyone wants expert advice to help them figure out what they should be doing. of course, they are just being scared. ♪ tonight i'm introducing you to

my rally playbook. >> the house of pain! >> switching them around. what you should do if the market's up big. >> moo! >> no one said anything to me about the idea. but i also imagined some of them are thinking, cramer's finally lost it. no one needs help with a rally. no one wants help with a rally. great idea, jim, teach people how to cope with their profits. maybe i'm just paranoid? well, maybe. i mean, come on, is there a critic who isn't out to get me? the fact is, even though a rally feels a lot better than a soul-crushing decline, it's just as easy to screw it up. the rally playbook might be more important than the selloff playbook. if only because few people think they need one. right? most people say they need the handbook for when it's up a lot. fewer still know what to do. good thing i'm here to share my accumulated wisdom as a well-preserved 63-year-old, i get to call it wisdom instead of just "stuff i've learned!" here's my first rule. when in a rally, be really tough

on your portfolio. that's right, big days, that's the time for scrutiny. the only time you should be harder on the stocks you own is when you're in the midst of a brutal, horrible decline in the market. and you need to circle the wagons. meaning, dump everything you aren't thrilled to own and use the cash to shore up your positions in the stocks where you have the most conviction. that's right. when it comes down, you got to buy the ones you really love. how does one get tough on his or her portfolio? should you beat it up for lunch money? maybe give it a stern talking to about how it's not meeting all of your needs? how about grounding it for a week and no tv and, more importantly, video games either? certainly no beer bashes. okay. i'm not ruling these out. but, i mean, you have to give every one of your stocks the harshest possible evaluation. suspend the benefit of the dow. assume everything you own is guilty until proven innocent,

which is, of course, how we want it in cramerica. focus -- that's because we are not really big fans of the first ten amendments. focus on the first qualities of your stocks. emphasis the downside. make your stocks prove all over again that it's worth holding and not a potential -- if this strikes you as silly or unfair to your great stocks, let me explain. on a good day or a good week, you're ready to fall in love with your stocks. although, remember, we never do that because, what are they in the end? they are pieces of paper. they've just made you so much money, which is why you fall in love with them. but this isn't "survivor," which is a really bad show, because it's on another channel. oh, also this isn't "survivor" where the winner gets to be immune from being voted off the island. i think that's the theme. i've never watched it, ever!

and won't! in a rally you shouldn't give your stocks too much credit for making you money unless they dramatically outperform the rest of the market. even then, you should give them a very hard time. a real whipping! when you make money on a stock, it makes you think more highly of the stock, but it also makes the stock more expensive! >> sell, sell, sell! >> during a rally unless there's some good news that bolsters the case for some of your stocks, they all become pricier and less desirable. they are kind of lifted by the whole futures, you know, the s&p 500, the russell 2000. with the exception of anything that you own that didn't go up during the rally, those i will address later. why don't you think of it like this, after a rally, your entire portfolio just got more risky. you could say it got worse, for shorthand. you made money, which is what we're after, but you can't let that prejudice make you favor

any of your stocks. just like blackjack, where the cards have no memory. stocks don't either. your stock went up today. great day for the market. that doesn't have much bearing on where it goes tomorrow, which is what we worry about on this show. that's the first reason to get tough on your stocks. all of them just got worse. the risk/reward got a lot worse. if you bought a stock thinking it would go up $10 or down $2 and it went up $5 today, you now own a stock where the downside now outweighs the upside is! down $7, up $5? so what if it's a performer, that's awful risk/reward. and you know what you should be doing? >> sell, sell, sell! sell, sell, sell! sell, sell, sell! >> trimming. lucky you have the rally going on so you can sell at a great price. we call that into strength. the other thing with your stocks is figuring out what to sell. i talked about it earlier in the

show. a rally is a selling opportunity! >> sell, sell, sell! sell, sell, sell! sell, sell, sell! sell, sell, sell! >> you should sell more stocks and more stocks than you two have, say, on an ordinary day where the market doesn't do much. this is, of course, totally emotionally counterintuitive. can i use that word to apply to feelings? yes, i can. because it's my show. do you know what i ought to be adding in my show, the phrase "if you will." because it takes up a lot of time. what december it mean, if you won't? it's something i'm fixated on, because a lot of people kill time saying "if you will." i don't because i don't have a lot of time. everyone is buying like crazy, and you're euphoric and you don't want to sell either, but you have to, because there's no better time than to sell than in a rally. you need to re-evaluate your stocks and demand a lot more from them than you ordinarily would on just typical days. i have a very specific way of grading my stocks. every week -- remember i don't own any stocks. i run a charitable trust. and i have to grade those stocks.

the profits don't accrue to me. they accrue to charity. i rank them from one to four. ones are stocks i would buy at the current price. twos are stocks that i'd buy if they pulled back lower. threes are stocks i would sell into a rally. sell at a higher price. and fours are stocks i should be selling, period. but i -- i just am not exerting enough discipline to sell them. a rally simplifies things. prices are up. so, ones become twos, right? they get more expensive, you trim them. most things will be too expensive. there will be a pullback in the future. you can buy them back. that's something we do here. a lot of the gray beards don't like that. but i don't know, how do the gray beards justify their gray-beardedness? shouldn't they be more conservative? as the market goes up, the threes become fours. you've got a reason, you have a higher price. you can sell the stocks you wanted to sell higher. it's a gift. this is a preliminary approach to what you should sell in a rally. more details later in the show. teasing! the reason we rank our stocks is to change our approach in the market and prevent ourselves from becoming enthusiastic buyers, that's the real emotion we're checking here.

most people for reasons we don't have time to go into now, if you will, all right, really enjoy buying, but not see selling. because they see selling as a defeat, right? i don't have to do that. it's not a defeat when you're getting top dollar during a big rally. but first you have to put yourself in sell mode, and you start by getting tough our stocks! i want tough love on your portfolio in big rallies, even if it's corporal punishment, or worse, capital punishment. or actually, better, for those of us that have a fondness for the needle. the bottom line, during a big up day and after, don't get swept away by the euphoria. give your stocks a hard time. hold them to a higher standard. and get into -- >> sell, sell, sell! sell, sell, sell! >> -- sell mode. take calls. brian in washington? brian? >> caller: hey, jim, big booyah to you. >> oh, man, nice, nice booyah, chief. what's up? >> caller: well, i had a

question about pin action. >> oh, wait a second! courtesy of the balmoral lanes, i've switched lanes. what's up? >> caller: is it a good strategy when the rally comes to send the key players and try to sell their pin action? if so, what's the best way to research? >> not if you're trading down, my friend. i am a big believer that the best stocks do go up hard during these rallies and you can trim them only because you want to buy them back lower. not because you want to go to second tier. second tier has hurt me! i am a best-of-breed fella and i'm not changing my stripes. can i go to christine in idaho? christine! >> caller: hi, jim. >> what's up? >> caller: booyah. >> you can always use those on an up day. what's on your mind? >> caller: i started watching your show three weeks ago. i love the show!

>> welcome to the cadre. welcome to the fold. >> caller: thank you. hey, my question is about the last half of the year. is it typically a cycling-down time for the market? should i continue to buy? or hold off until -- >> it's not a cycling down. let me tell you about a little thing that i learned when i used to run money professionally, which is beginning around september, october, we stop thinking about the previous -- the current year's earnings estimates and we start looking at the foreign years, you know, way out there. talking about, you know, maybe a year, two years. that's a bullish time. when we can start looking at next year, what happens is we have estimates going up. gives you more of a reason to stick and to buy. no, don't you sell, because the second half concerns, that's a mistake. my rally playbook during a big up day, set the bar higher. protect yourself from the downside. be tough on your portfolio. more tips for big up days, stick with cramer! don't miss a second of cramer. now you can find each full episode of "mad money" on itunes, and download it for free. take all of cramer's picks, pans, plus the "lightning round" with you on the go. get "mad money" on itunes today.

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it's a theme that runs through a lot of the books that i've written, but frankly -- tough to tell which one i look better in. do you know what, it's this one! this should be the cover of every book from now on! over and over again i've been telling you that i think you should sell into a rally -- okay. boy, what just a rage of vanity. i want you to extoll the virtues of something that sounds obvious but can be hard to do. because our emotions mess with our good judgment. you should be up a rally, but instead, we just end. people don't like to hear about selling stocks! >> sell, sell, sell! >> they want to know about buying stocks. >> buy, buy, buy! >> selling is just what happens after a buy.

but let me make this clear. selling in a rally is not solely about turning a profit then and there. the rally is the best time to sell. but the best reason to sell or cut your losses during a rally all boils down to what i talked about at the beginning of the show, prep, preparation. this may be because i'm a glass is half full kind of guy. kind of destroys the analogy, but tastes really good. when i'm a glass is half full guy, but i believe you should always be preparing for the bad days, so it makes it half empty, those are inevitable. the market's gone up thousands of points since i started, but do you know what, i still had a lot of selloffs. that mean the rally is your best opportunity to protect yourself from the downside. that's right, i'm going to repeat that. rally is the best opportunity for you to protect yourself from the downside. trust me, you get the most mileage out of preparing for the worst days on the best days. plus, as you can read in one of my recent books -- who knows --

"stay mad for life." see, look at this. look what i will do. this is when i did headstands to get you to buy this one. most investors are trying to invest for a lifetime, they should always be more focused on keeping their money than making more of it. capital preservation is like rock beating scissors. it outbeats capital appreciation. that's an easy way to remember it, right? doesn't rock beat scissors? i'm trying to think. yeah. in fact, that's true for almost everyone except perhaps the very young who don't have much capital to protect. those guys can let it run. in a way the rally playbook is an extension, really more of a prologue to the selloff playbook.

we use the rally to stockpile everything we'll need in case things get bad. and one of these things is one of the most important concepts, one that is underrated, it's called cash. i'm not a capitalist at heart. i'm more of a monarchist, as long as cash gets to be king. by the way, coal is not king and nat king cole is not king. this is king. larry king's not king. playing all cash is probably -- although if you played for nbc, would larry king be king? plain old cash is probably the single most important part of your portfolio. most people don't know this. i hear from people all the time who say i'm fully invested. i'm fully invested, i have no more money. meaning every bit of their money earmarked for investing is already in. whenever tells me this, man, i'm so smart, i'm fully invested! cash, my friends is what makes everything else possible. i would never, ever have less than 5% of my portfolio in cash. and i would try to get up to 10% if the market took a tumble. we had an unbelievable selloff. >> the house of pain. >> and maybe we have to take cash lower. cash is flexibility. when the market gives you an opening to start a position in a stock you want -- or to buy more of something you already own or you want some more of that cash on the sidelines to commit. otherwise you have to sell something you already own on the fly that you like. or you use margin.

♪ meaning borrow money from your broker! something that i never recommend doing, as it's too risky. i only did it a couple times in my hedge fund, which i don't run anymore, despite what the boards and bloggers say. speaking of margin, a big rally gives you the best opportunity to get off margin. and start investing like a sane man. ♪ hallelujah rather than someone with a financial death wish. >> no, no, ahh! >> what's it got to do with responding to a rally? while we all like to be heavily invested with a little cash ahead of the rally, trying to call one in advance is way too difficult. the best time to raise cash, which many of you must do if you're fully invested and the rest of you should want to do, is right after a rally. whatever you sell to raise cash -- and we'll talk about that after the break -- you'll get a much better deal after the rally. but listen! listen up! i'm not just saying that rallies are a great time to raise cash.

i'm saying i believe it's essential to raise cash after a rally, or during. in other words, this isn't even an option. i never want to hear, oh, i let it ride. i don't care how much you like your stocks. not selling something to raise cash when the market makes it easy for you, that is reckless. that is asking for a train wreck! the quality of your stocks isn't even part of the equation. okay? you can buy them back lower later with the cash you raised. it's going to happen. that's the point. the next time things go sour, you'll have that terrific pile of cash you hoarded up. ♪ hallelujah during the rally. and you'll be able to buy on weakness. >> buy, buy, buy! >> really the only thing you should be doing is buying weakness. it isn't about getting a great deal. it's about protecting yourself. if raising cash is essential, spending it is prohibited. you're going to be tempted to

buy stocks the next day. >> all aboard! >> don't listen. rallies make us bullish. when your last experience in the market was having almost all of your stocks produce huge gains, you're going to feel like buying. >> bless you. >> i have never seen anyone else sneeze on tv. how do they repress it? i mean, i've had hiccups on tv, too. how do they repress it? what is -- is there a class that i can go to? write me. 1-800-784 cnbc to tell me how i can keep from sneezing. when you buy stocks the day after they've gotten huge markups, you're letting the rally take advantage of you. i know this sounds like common sense. i mean, something any idiot could figure out. but i don't want to waste your time on this show. of course, you know it's silly to buy the day after a rally. discipline, people. you know it right until the time comes, and then you get swept away by your emotions. i know people who after a rally, do you know what they want to do? they want to back up the truck. take that! you need the playbook. you need rules!

rules to prevent you from getting swept away and making mistakes you're going to hate yourself for later. so, please, if you want to buy a stock and the market has just had a remarkable run, do me a favor, and tell yourself you missed it, or i'll have to administer electroshock therapy. just say you missed, say it, and take a pass, it's the smartest thing you can do. and it will save you a lot of pain. >> the house of pain! >> bottom line, two rules for rallies, raise cash, and do not buy. >> sell, sell, sell! >> stick around for more of cramer's rally rules. but let's go to north carolina and speak with george. george? >> caller: yeah, jim. >> george? >> caller: booyah. >> what's on your mind there? >> caller: thank you for your show. i haven't missed an episode in months. with every bit of news having such an effect on the market, would it be better to wait until any news is out or wait until

the next part of news is released especially for the new investors? >> you're approaching it all wrong! you wait for good stocks with companies that are good that the stocks fall. you are trying to time it as a part of an s&p situation! the standard & poor's. look at these companies as individual companies. if good stocks, have stocks that get beaten up, then you pull the trigger! joe in new york. joe? >> caller: hey, jim. how you doing today? >> not bad, chief. how about? >> caller: i'm all right. i'm hanging in there. >> good. what's up? >> caller: you always say pigs get slaughtered. but is there ever a time not to sell during a big rally? >> well, i mean, time not to take profits. if the market's dramatically oversold, if it's down really huge, then i think you might want to hold on a little. i mean, sometimes i feel like, well, wait a second, we've been down for so long, don't be in a hurry.

don't be in a hurry to sell. >> sell, sell, sell! >> but after the fourth or fifth day of a rally, it doesn't matter, you've got to start selling or else i will come to your house and administer a beating or a whupping. my two rules for rallies -- raise cash and do not buy. oh, my third. stay with cramer! do you booyah? >> booyah, jim, booyah. booyah. i've been talking all night about my rally playbook and how this -- oof!

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i've been talking all night about my rally playbook and how this -- ♪ hallelujah -- is not what you should be thinking about, but this. >> the house of pain! >> and how all the rallies should focus on selling stocks.

>> sell, sell, sell! >> buy, buy, buy! >> but i haven't told you the kind of stocks that should make the best sells of all during a big up day. >> >> moo! >> there are two types of stocks i'm going to recommend selling into a big rally, but the two categories are incredibly arcane and complex, meaning you're thinking about turning the station, i'm begging you not to. this has required years, if not decades of training on wall street, and if not academia to comprehend. but i know you guys are a smart audience, so i'll take a stab at it anyway. that's the stab, okay? okay. jim booyah. isn't that cool? come on, it's really cool. of course, it doesn't works were because i don't know how to do lighting and lighting is the most part of the show instead of sound. oh, boy. in a rally, you want to sell

both good stocks with great runs and bad stocks you either wanted to sell in the strength or that belong to a curious and honestly embarrassing club that i'll tell you about in a moment. people are always trying to burn me at the stake. and, you know, i don't -- kingsford right at my feet, or at least throw rotting fruit at me, because only in the cellblock do i generally takes stocks that i've recommended and now tell people they should be sold. you're not supposed to do that. have you ever seen somebody on tv say, you know, listen, i had a really good run, i want to sell something? no. some things get so bad that i want to sell them into the actual sell block. in rare cases. the people think they are either a buy or a sell, and if you vacillate you must be full of it or a flip-flop or a shyster, which i thought was an anti-semitic term, maybe it sounds like shylock, "merchant of venice." not that great a play. okay. the truth is most stocks are buys at some prices and sells at other prices. when we get a rally a lot of stocks you bought lower for good reason should now be sold.

you don't have to sell every single share. that's another mistake people make constantly. which i detail in this book. how about this book? this book doesn't cover it at all. i prohibit that kind of thing, which is another nuance that goes ignored by the people that want to cut my head off for considering price when i decide if a stock is a buy or sell. it always happens. they'll say, like, jim, you liked heinz! these people have so much time on their hands. you like heinz and, i don't know, $30, and then you hate it at $50. what kind of nonsense is that? no, that's actually buying when there's less risk and selling when there's more risk. what are the good stocks you should sell into the rally? i would mostly want to trim back my positions in my really big winners and in my momentum stocks. these don't have to be winners for you necessarily, but they've become more and more expensive as they go high, even though they are high growth, they are high-priced earnings stocks that are on a roll lately, at or

least a year or two, which is more typical. selling your winners into a rally makes sense. by virtue of their performance, they will be taking over a larger and larger chunk of your portfolio. we don't want anybody to be overwhelmed by one position. for example, you bought apple and it was 10% of your portfolio, but then it doubled and became a much larger piece of the portfolio pie? hey, high-quality problem, but it is a problem. since you need to stay diversified, you got to trim these, just to keep them from dwarfing your other positions. think of it like a tree. not the trees that are cut by those brutal guys who do, like, the power lines! those guys are awful. i'm talking about a little trim. even if a stock has an amazing story, no one ever lost a profit by taking a profit. and besides, you can keep your big winners on the table. just cut back on the number of shares. a little trim. momentum stocks like to be big s winners a rally, and they're

also more risky than most other stocks. but like with your big winners, you don't have to take everything off the table. you just want to be stuck -- you know, look, let me make this point again. this is something that every time i talk to someone, they -- who doesn't understand the show, i like a stock at one price, and then the same stock i may not like at another price. now, when you hold a ton of momentum stocks when the rally ends, they're going to lose their momentum, and that will lead you to losing a lot of money. if you take a little off in the rally, then you can buy them back when they start losing. when everyone is choking, you're buying. what's worth selling that's no good? anything you plan on selling before, get rid of it. and you can sell in huge increments because now you're getting a much better price than you deserve! then there's the losers' club. if you own a stock that went down during the rally, oh, man, that stock's a stinker. it's a dud. it's not going anywhere. you need to sell it and sell it now. the market is telling you, bozo, get out! and not because you want to raise cash or even do anything else with the money. you just got to go. you sell your losers because

they lose. i know, winners win. these are cliches, but you know what, they have some truth to them. why don't you go buy something nice with your money if you want to. a nice sweater. just get it out of any stocks that fell during a terrific rally. it's a sign that something is very, very wrong with them. it may not be their fault. it's usually a macro problem. meaning, having something to did with the larger economy and not the stock itself. we don't really care what's to blame. we care about winning, and these stocks don't win. we also like nice sweaters. bottom line, sell your big momentums, and the biggest losers and the stocks you already planned on dumping in a rally and you'll be in great shape. stay with cramer!

in case you missed the beginning and the middle of tonight's show, you need to know two things to catch up.

first, you're watching the "mad money" rally play book. i spent the whole show tonight trying to teach you the best ways to try to take advantage of a market that's up big. and second, i'm deeply wounded by the cold shoulder you gave me when you willfully chose not to watch most of the show. i know you did it as a callus and sadistic attempt to hurt my feelings. it worked! i hope you're happy. tv personalities, they have feelings, too. back to business. most of my rally playbook has been about what you can do to benefit from higher stock prices. how you can use a rally to set up the rough patches that the market runs into sooner or later. and which stocks you should sell in order to accomplish those goals. the last part of my rally playbook is a little different. it's not about what you can do during or right after a rally, which we've already covered. instead i want to talk about what a rally can teach you about your portfolio. i'm not so worried about anyone seriously underperforming the averages during a big up day because that's something you can easily study and fix, updates take care of themselves.

what should get you concerned is seeing your stocks dramatically outperform the averages. yes. making too much money can be a problem. or more of a warning sign. the warning is very simple. you're taking on way too much risk. i know i don't strike many of you as the most conservative investor around, and the fact i do this show every day even though it doubles my odds of a coronary doesn't help, okay. but taking unnecessary risk in your portfolio makes absolutely no sense. and watching your stocks move up in a rally is a great way to tell if you have that unnecessary risk. if the rally -- if we get a 1% gain and your stocks are up 2%, i'm telling you something, you're in trouble. the rally comes, you make more than the averages, the question is why? were you using margins? borrowing money from your broker to get that extra bit of leverage?

that will help you crush the averages in a rally, but it will crush you. in a selloff. if you're not diversified, you could also make way too much money in a rally. let's say it's led by oil and your portfolio is unbelievably half oil, you're not listening to the show. you're going to be a huge winner that day. that's the rally telling you to sell a lot of oil and call me up to play, am i diversified? if you can't figure this out, it's not the market patting you on the back for a job well done. the bottom line, the best time to know if you're making too much money, which means you're doing something dangerous, is during a rally. use it as a diagnostics test to see if your portfolio has too much risk or is okay. (announcer) this is nine generations

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more like a 900 v-twin. excuse me. well, you're excused. the right insurance for your ride.

now you've got it, the "mad money" rally play book. i like to say there's always a bull market somewhere. i promise to find it for you right here on "mad money." i'm jim cramer, see you next time.

> are you back in? stocks rebounding this week to new 2009 highs. if you think you're too late, the traders have your plays from here. from the nasdaq market site, i'm melissa lee. this is "fast money." these are the "fast money" traders. we've got the rally from all angles. and we've seen the town hall forays, but steve grasso has a fast way to trade it. do not miss it. but first, the word on the street right now. we're not as rambunctious as the crowds there, but it was an exciting day in terms of stocks. grasso, you were on the floor of the market. >> you saw people scratching their head, now more so than ever.

i've been saying this for the last couple of weeks. all the shorts are figuring this market has to come in. that bet has not worked and i have not seen any new shorts coming to the marketplace. >> at some point isn't that going to come home to roost? >> a baseball fan, no. but i've been more wrong than the mets' medical staff the last couple of weeks. so, mea culpa on my part. i get that funny feeling that we're setting ourselves up for a big fall, but today was a slap in the face for me, boy. >> if you learned anything this week, you learned about the tremendous amount of capital sitting on the sidelines and you learned how asset allocation how money managers are clearly right now underinvested in the market. that's what this was all about. we got down to 975 on the s&p 500 futures. we turned around aggressively higher. got up to 1025 today. why is that, because everyone is underinvested right now. if you are playing the market right now, 975 is now your route and the mini s&p gets