mont months. >> agreed. >> health casework an interest in pfizer and amgen. >> so you won't need to buy gold bond powder if you treat your body properly. i've really enjoyed being with you guys. it's a tough show to do. looks like our time has ek my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now! hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i just want to make you some money. my job is not just to entertain you but to educate you. so call me at 1-800-743-cnbc. you thought we done with earnings.

forget about it. sure, we have vulcan materials kicking things off on monday, and this maker of aggregates, also known as stone, is going to tell a pretty good story. vulcan does well when there is construction in the company and highway billsening pa ebeing pa. right now we have both. and then we go to caterpillar, because construction is booming. i know that many of you at home are hungry for yield. which is why i frequently get calls about frontier communications. that's a plain old telephone company with a more than 8% dividend yield, their report's on monday after the close. you know i don't like to reach fo for income. and if you own frontier stock, you are definitely reaching. i prefer verizon, less risk, more growth with verizon. tuesday's big. we get results from procter and

gamble. cummins is all about selling engines to china. and we know the people's republic is getting stronger when it comes to engines, then we get to procter & gamble and cvs. procter hasn't been doing all that well, but its stock is strong. what's the deal? people expect procter and gamable will unlock value. and you're being paid to wait until that happens, thanks to the 3% yield. cvs is regarded as another retailer these days and retails under the amazon gun. the fact that cvs owns a very good pharmacy benefit manager doesn't seem to matter to this market. still, i like both stocks very much.

after the close tuesday, the notoriously controversial fit bit reports. and while i think it represents good value down here, the company seems to snatch defeat from the jaws of victory every quarter by blowing away the nuns and then giving you awful guidance. you think they would see through the pattern by now, but they don't. then we hear from electronics. but i think it's gotten too expensive. and then we get numbers have a brooklyn speculative company i like, called etsy. it's been moving up nicely since they turned positive a little less than three months ago. i think when we see the numbers the trend continues. wednesday, we hear from one of the most consistent names in the space. we hear from clorox. it's already come down a great deal from its highs.

if we get some punk data, this stock may be ready to run again. here's one i'm really anxious to hear from. they've been on the show, rr donnelly, the business services company. this more than 5.8% yielder has been a winner for us, to include capital, depreciation and the dividend. not long ago we heard that xerox might be interested in acquiring r.r. donnelly. time-warner weighs in on wednesday. and this stock is roughly up 20% for the year. it was depressed in 2015, due to cord-cutting worries. that said, i think it's run too much. i'd wait to see if there's any profit taking before buying this one. what else? we're huge believers in the hume

t enization. great company, great stock. after the close wednesday, we hear from 21st century fox. but because of the management shakeup at fox news, it will be the talk of the town. so i will be glued to it. the next comes from herbal life. it not to live to play again, something that really bugs bill ackman. i want to hear what kind of action herbal life takes now that it's free from the investigation. i wonder if it will have to change its selling processes that hurts its profitability. you want reliable? most people don't pay enough attention to one of our greatest winners on the show, henry shine

which reports thursday morning. this dental and veterinary, there's that theme again, supply company has been one of the most consistent i've ever seen. i like henry shine management and its business is stable that you have to hope the stock pulls back ahead of the quarter. if it comes in, i buy. here's the company that's been the subject of takeover talk, endless, i brief the stock will cool off after the reports. to be sure, general mills says its cereal business has shown recent growth. i want to know if that's significant to the cheerios, no celiac. we just had our fed meeting this past weekend and the fed seems on hold for now.

if we get a barnburner, i bet the rate hike talk will be revived. and be aware that whatever you buy in that category off of earnings could be trumped by an overheated jobs number. a bad number, a weak jobs number will cause more protectionist talk from donald j. trump. we want to be careful, a weak number means tough trade talk. tough trade talk means the stocks in the international companies i think are now going to come under fire. here's the bottom leine. we're not done with trading season. stay sidelined if you can. read the conference calls, not the headlines. >> you might just find some great opportunities.

bill e billy in texas. >> caller: i had a quick question about under armour. they reported in line results with the top line estimate. their second quarter earnings showed revenue growth, and they said they're going to sell in high-end outlets, which is kohl's, with all this being said, the stock has dropped about $5 a share in the past week. >> billy, they've reported in-line numbers, and that's not enough for super aggressive stock, and now i'm concerned that adidas has woken up. and that's a sleeping giant and could hurt the company too. david in louisiana. david. >> caller: big boo-yah from louisiana. >> love louisiana, what's going on? >> caller: i got a question. i bought cyberark. it's like a sky rocket. it's gone up.

but there in are big highs and big lows. should i hang in there? >> yes. i think the cyberark ceo, he does a good job. they've got amazing technology. i think you should stick with cyberark. another big week ahead. i say stay focussed. i'll keep paying someone to sleep for me next week too. i've got a lot of "mad money." i'm revealing some meth otds to my madness, including new ways to find stock market merchandise to buy. and you've heard about insider buying. i'll fill you in on the the action my experience dictates, and a key strategy from my old hedge fund, now could be one of yours, too. stay with cramer! >> reporter: don't miss a second of "mad money." follow at jim cramer on twitter. have a question?

tweet cramer, #madtweets. send jim an e-mail at cnbc.com. or give us a call at 1-800-743-cnbc. miss something? head to "mad money" been the cnbc.com. will your business be ready when growth presents itself?

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tonight, i'm letting you in on something real big. the method of my madness. i know this is the craziest, most bizarre thing on not just business tv but television in general. i minean, think about it, a one-man show about business? you won't find advice this good about invest beiing anywhere el. you know that. you might see if tonight's the night i do go off the krrail. sorry guys, there's a tape delay. this show is all about the method or methods to my madness. how do i pick stocks? what gets on the show, you always ask me that. why do i tell you some stocks are worth buying now or on the

dip instead of saying hey, what about tomorrow. let's get rolling. one of the easiest ways to identify potential cramer names for "mad money," the stocks that could but won't necessarily always end up on the show is by watching my favorite list from when i was frankly a little boy in fifth grade. i used to look at the new high list. i thought it was like the guys who were hitting better th than .300 in baseball. the stocks in that list, the highest of the high, as only the best of the best can hit new highs when the market's falling apart. so what's it tell you when a stock hits a new high? either it's part of a genuine bull market or maybe sector dust, which is so often responsible pour stofor stocks . they often keep going higher, because it's a list of

a-students. just like the really smart kids in school. in a great bull market like we've had it frha from the bott 2009, and any market that doubles from the bottom has to be considered a bull market, the same stock would hit new high after new high after new high. and following them was a great way to make monday eakes even as the bulls claimed that the bear market was false. listening to the -- the rule over type, all time. things will continue to work. because these stocks particularly represent stocks that are best of breed.

i'm saying that if you want to identify stocks that will be winners in the future, unless there's a big sea change in the market, 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. it's already been scrutinized and stcrubbed. there's often more continuity than change. things usually keep going the way they're going until something major shifts. and then you have to alter course. those changes can be pretty radical. that's when you have to be reevaluating your ideas and can never dig in your heels when the facts change. something we emphasize over and over and all my books that i've written save my auto biography,

confessions of a street addict, it isn't called mad money for nothing. but when you're looking for stocks to invest in, when you're hunting for the bull market like i'm always doing here, i don't just pluck high list. anyone who sees insane tweets at 5:04@jimcramer. somebody says is that somebody else tweeting for you. who else would do that for you? then people ask do you ever sleep. to i rarely recommend stocks straight off the new high list. what i do like to do when i'm hunting for stocks and what you need to do is wait for the fabled pull back from the new high list. because that is the best place

to put the money. the pull back, and there i'm thinking about something that could be two or three, preferably 5%. remember, i'm not telling you to chase momentum. you should always be conscious of price and try to buy on weakness, just like you want to sell on strength. most people can't pull the trigger. they think it's something wrong. i'm throwing these caveats. all be it a very important one for those frying to get started. poring over the new high list is a fabulous way to look at potential stocks. i emphasize that word, potential. you have to do all the same homework you ordinarily do before buying a stock. you don't get a pass there. you absolutely must have conviction, even if it's a cynical conviction that the stock is going higher.

i do that for a lot of the ipos. the buyers go crazy about it. pea, i accept that they're just pieces of paper. the big boys can't resist growth stocks, and they will always come to the support on down days. the biggest couaveacaveat, make they haven't sold off for a good reason. don't go buying a homebuilder that's down if interest rate goes up because they could get hurt by the quarter. by the way, don't buy a big independent oil stock when oil goes down for three straight days. you're trying to look for a stock that has bristol-myers-like strength. almost nothing has to do with bristol meyers. if the fundamentals haven't changed, the stock probably hasn't fallen from grace. it's pulled back for mechanical

reasons. you see the stocks of good companies pull back from their highs for nothing that happened to do at the company. nothing to do with the company or the strength of the underlying businesses. those are the buys. but if the fundamental picture changes, whatever made the stock attractive goes away, then that stock is no longer a candidate. >> sell, sell, sell. >> it has to be in tact or this method will let you down. i tend to like stocks that have pulled back just enough but not too much. 8% is the historical optimal level of a pull back that i've really made a lot of money in. less than that, you're going to be early for some of that. more than that and maybe something is indeed wrong with the stock. you just don't know, 3, 5, 8,

those are all important loeevel. by the way, that's the first method to cramer's madness. some of my best picks have come out of this process. it's my getting-to-workshoping li list. let's start with arzella. >> caller: i'm trying to get a better insight on mutual funds. are they a good way to diversify? >> a lot of people have 401(k)s where you have to have mutual funds. the rest would be a balance 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 some of the performance records in morning

star. stuart in florida. >> caller: what's the best time to use stop orders after you purchase a position? >> no, we're not going to do that, because you see if we're going to trade actively, we're going to have to pay attention to it. we don't need stop orders. the market could be down 10% in a flash day. you will have sold the stock and boi bounces back and you say what the heck happened. we're not traders, we invest. there's a method to this madness and i'm revealing it all. look for stocks that have pulled back from new highs, especially something from a pull back that have nothing to do with the stock. stay with cramer. ♪

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welcome back to tonight's method to madness special where i'm revealing some of my best tricks for buying and selling stocks, truly investment wisdom for the ages, i hope. next how do you find stocks that are great buys? i said you didn't necessarily want to buy names right off the new high list because you're paying too much for them.

you can usually get a better deal if you are patient. given a volatile and crazy the market's become, there are very few occasions when buying a stock right off the new high list are justified. but sometimes a stock is so hot you have to buy it whenever you can as soon as you can because it won't be going lower anytime soon. you don't find these often. but you have to remember not to buy all at once. you think it's got so much mojo that it won't get a pull back, go ahead and buy 25 shares. and find another stock. there is always another stock to find. now i've got an exception where it's okay to buy a stock right around its high. if you see insiders buying the stock when stocks up a lot already, i'm going to give you a total buy, buy, buy green light.

it's rare that this method of picking stocks doesn't work out. i love it when insiders buy after a decent run. that's a good sign of confidence that they think there's a big runway ahead. and they have lure sure it's l t long-lasting. these people are seeing things that aren't going to disappear in six months time. normally, insider buying ranges from being meaningless but a small reason to buy the stock. they want to give the impression of confidence. create an illusion that they are doing better than they are. insiders aren't stupid. they know if they're seeing buying their own stocks, the market will smile on them. that's father. but we avoid most tiny insider buying because it could be flim flam. what a word. we used to call it "painting the tape." makes it look better than it is. that said, when you get colossal

insider buying, you might want to take another look at the stock in question. when the insiders buy a whole lot of stock, it's the volume of the insider buying that declares its sincerity, but we're only focussing ong on-- on one right now. there's nothing more arrogant and telling when an insider backs up the truck for his own stock when it's been rolling along at a pretty good clip. they are avenue sayi're saying,e rock. we're not waiting for a pull back, no. we're buying right now. this is bankable, corporate insiders aren't fools, with some notable exceptions. if the stock's on a tear, let's assume they're buying, they probably know something. after the financial crisis and market meltdown at the end of

2008, i know a lot of people think that all ceos and executives for that matter are a bunch of crooks, frauds and malbanks. especially those who got burned owning the old fannie may or lehman brothers. a total unwillingness to believe in anything positive is something else entirely. if were you to own stocks you need to be able to extend some measure of trust in the people you own shares of. we have a massive consolidation of industries of late, perhaps these executives are buying stock because they hear the footsteps. maybe they've been contacted by some other company and turned that company down. spurn overtures happen all the time. when executives suspect they could be next, it could be an honest reason to buy. of course they have to disclose anything that could be a serious bid. but a lot of types thimes they

phone call that says, no, buy. like the old fortune brands. maybe the stock's run just a bit. and they recognize how much better the company will be when it's divvied up. for us, buying after big runs can be a bit reckless and lazy. most investors are smart enough to wait for pull back before they pull the trigger. sure, i want to wait for a pull back after they bought, but that's the best of possib t of worlds. when you see an insider buying a stock that's already at a solid run you probably want to be buying too. bob in new york. >> caller: a steeler boo-yah to you. i have a question about interest rates. when the fed raises interest

rates, good companies with attractive dividend yields and growth prospects suddenly rapidly go out of favor. can you add some clarity as to why? >> they perceive as being a risky yeed, which is a stock yield and going to a certainty, which is a bond yeed. it's all relative basis. rick in california. >> caller: boo-yah, jim. >> boo-yah, rick. >> caller: how do i add my position if the stock hasn't gone down to the average price? >> you can't. 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, here's another method to my mindness. when you see inside buying in a stock that's already had a big run, think to yourself, i may want to be buying here too. what's better than "mad

money"? how about more "mad money"? follow "mad money" on facebook, twitter and instagram to go one on one with cramer. >> what other questions do we have? ah, i always tell people you have to start with an index fund, because i need you to be diversified. >> get more with guests. and go behind the scenes with the most interactive show on television. >> if you can't explain in three bullets why you're buy ago certain stock, don't buy! >> follow "mad money" today. hey look, it's those guys.

[music] shawn: look at those pearly whites, man. [music] bud: whoa, cute! shawn: shut-up. jess: are you good to drive? shawn: i'm fine. [music] [police siren] jess: how many did you have? shawn: i should be fine. jess: you should be? officer: sir, go ahead and step out of the vehicle for me. shawn: yes, sir.

bud: see ya, buddy. today, shawn's got a hearing, we'll see how it goes. good luck! so, it turns out buzzed driving and drunk driving, they're the same thing and it costs around $10,000. so not worth it.

i know the rap. it will be from some of my critics. that i'm all about trading, that i don't have any advice worthwhile. that's entirely untrue.

this show has adjusted over time. it's really about longer-term investing, not trading. if you've watched it anytime over the last five years, you know that. knowing how to trade can make you a better investor, and trading around can make you a better investor. in markets hike this one, there are periodic swoons, after runs like we've had since the bottom of 2009. it does help the trade. what does it mean to trade around a core position? first you need a stock, one you like, one where you have an opinion, a bias, where you really wa really want to buy. what you're looking for is a great company which a stock that could get tossed around by market volatility but you believe will get higher if you are patient. you'd set up a position in the stock. buying in increments, because we

all know that buying all at once is arrogance, and that's not going to be allowed on "mad money." why don't we use google. only over the long term will i tell you that i like it, because it's very volatile short term. so let's say you want to own 100 shares of google over time. and the way to set up that position would be to buy 25 shares four times over a period of weeks. or even months. let's say you want to trade. i know many of you want to, but you file discouraged, because you remember how all that amateur day traders, they got blown out when the tech bubble burst. the keyword is amateur. you can do it right, like a professional. the commissioners would eat at your profits and it wasn't worth while to trade. that hasn't been the case for ages. let's come back to our long-term strategy. we want 100 shares of dpoogle and we want it long term.

every time the stock jumps 25 points or 5%, you might want to sell 25 shares. you shave a little off to bring in profits. once google reaches 525 you o 7 ownas many own 75 shares. it shouldn't be unreasonable, given that we're in a world where stocks can get crushed by all kinds of factors having nothing to do with fundamentals. let's keep using increments of 25 to buy it back. if google comes back to 500 from 575, you buy 25. you could even take your winnings this way and help buy 25 more if it keeps going lower, and you only got to sell 25

before the swoon. this might appear to be small potatoes. and repeat the process up on the way back. but over time your profits can add up. you don't have to do anything. you just hold it. that is fine with me. but people ask me about what trading around the core position is, and that's what it's about. if you're good at trading around a core position, it's right to be bored. there's nothing exciting about the plan i just laid out. all you're doing is watching the stock move, trimming up or adding to your position. trading around a core position is the height of prudent portfolio investment. of course this whole trading around the core tactic works best with stocks at lower prices when you have more room to pie mo -- buy more. if you own a stock and you like it, you don't need to do anything. this is in response to any questions on twitter and in my

career about how i used to trade. you can scale these numbers, depending on how big your position is. the basic idea is to avoid putting yourself in a spot where you have too much on the table or too little on the table to take advantage of any upside that comes your way. trading around the corps position is an important strategy that you can use, any for those of you who find the notion of trading as opposed to investing, to be abhorrent. if you want to take it to the next level, there are two chapters. i used to think before "options action," the tv program that some of this material was too sophisticated for tv. i no longer think that. and you have to be willing to put in extra homework. it's more than worth the effort. the stock i used to demonstrate happens to be google. and you can see my strategy works better with options than with the common stock.

if's kind it's kind of a cheaper and less risky way. this stuff is hard. but i'm reacting to the requests i get all the time @jimcramer on twitter. we can't use actions. if you don't understanl options at all, in my first handbook, "real money." that's a compilation of what i taught people who went to work at my hedge fund, i have what an option is. now you know the basics of trading around a core position if you're so inclined. now you know how. stay with cramer.

i've got one more trick to teach you tonight, one more method to my madness, and this time i want to talk selling. which along with what price you buy could be the most important and most undervalued tool in your arsenal. how do you know when to sell a hot stock. how do you get out before the party ends, so you're not stuck cleaning up the mess. this is a good question to be answered. there's a lot of money to be made when owning a hot stock. but when you play the momentum game, you have to know when to leave the table. there are always nay sayers.

virtually all implode except those that are able to develop into multiple streams. stocks like chipotle or smaller tech stocks kept blowing up. and all the negative talking heads disguised as prudence cost you a great opportunity to make money. people shy away from these stocks because they don't know where they're going to top out. that's understandable. i'd be afraid if i didn't have a discipline to make me know when to get out. lucky for you, i do have one. when i'm talking about hot stalstal stocks. these names can go up for a very long time. they can catch fire and stay on fire for years without sponsorship. the key is watching the aprnaly coverage rolled out. once one of these hot spotocks

gets discovered, them the run is going to begin to peter out, not get stronger. it's going to be too big and too well-known to continue to if up the way it has. it's the rare stock that doesn't behave this way. you can look at it anywhere on the internet. it isn't hard to find information. this formula has worked for me for a long time. names don't get hot and pushed by everybody. they get hot because they get discovered by everybody. hot stocks get tapped off when there's nobody left to be attracted to them. when all the people who would be interested in buying them have already bought. they came out of nowhere, gaining more attracters and eventually, everyone who wants a piece of it has a piece. then it is over and you must ring the register. let me give you an example.

hanson national. it was the old beverage company. it was the hottest stock in 2004, 2005 and 2006. it went from $18 and change at the beginning of 2005 to $200 when it peaked in july in 2006. the whole way up, there were people telling you hanson who got its fame from monster energy drink had to crash. well, it did do that. but as often is the case, it took years for the momentum to run out, not days, not months, not weeks. years. i know how these stocks work. it peaked in july of tw2006. the company did a five for one split. this encouraged people who'd been in hanson for a long time to take something off the table, sell one or two share, but there was another reason why i

believed it had peaked. there was estimate some upside left after goldman started. but prudence dictated we sell once the stock had four analysts on t bit. better to clear out early. hot stocks started to cool off. incredibly, after hanson fell off the radar screen, people stopped talking about it, and analyst coverage dwindled again. the stock recharged, powered higher, and ultimately, coca-cola bought a huge stake in its equity, which sent it up higher. a stock i still like. it was a testament to the fact that when analysts stop following a company or do so on a basis, a storied lazarus move can happen. the bad drink ended up vanquishing the competition from major soda brands that failed to

materialize. as analyst coverage gained, there's so many analysts started covering it, the stock peaked. when they dropped it, the stock bottomed. that's how it works. steamy hot stocks are often worth owning. use four as a good rule of thumb, letting you know when to start selling, stay with cramer. yep.

stirred it... mm-hmm. drowned it again... mm-hmm. and now just feel if it's cold. yeah. cool. [camera shutter clicks] [whistling a tune] smokey just gave me a bear hug. i know. i already posted it.

. you got to get some of the tweets you've been sending me @jimcramer, mad tweets. our first tweet from jason asks, what are some resources that you recommend for technical analyst and indicators. i get most of mine from real money.com. the best technicians who explain what these terms mean and show them in action. that's what i did in that book. next, a tweet, should i have my money in an index fund, stocks

or both. stocks my friend. that's not the case with 401(k), which is why i like the ira option so much for more. next, jim, i've watched you daily for over ten years. you have helped massive amounts of people, thank you. there are so many people who come up to me and apologize that they want to tell me they like the show. excuse me, jim, i don't want to bother you, but i like the show. when you say excuse me, i think you're going to say, boom, don't excuse yourself. i am thrilled that 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 like it. at clear baffles, at clear baffles? at on few skate? same apply to etfs? i like to lower my basis, as the

stock goes down i buy, as the stock goes up i like to sell the higher basis mark. i own a charitable trust. but what i'm trying to do is lower my basis as an owner. why do i want to lower my basis? i don't like chasing, and i do like buying at a discount and lowering my basis is the equivalent of getting a stock i like of a company at a cheaper price than i got it before. that means i am getting a bargain. next, jay dal tweets, jim cramer has more follower than wyoming has people. at most underscore jeff asks, i have a long list of research companies i'd like to invest in but don't have money for all of them, how do i narrow my list? get a plan. which of the best at which levels. if you like them all, try to figure out what level would be the one where you'd really want

if to buy something and then stick with it. when stocks come down, people run from the levels instead of too them. this company's servers. accessible by thousands of suppliers and employees global them. but with cyber threats on the rise, mary's data could be under attack. with the help of at&t, and security that senses and mitigates cyber threats, their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t.

i like to say there's always a bull market somewhere, and he promise to find it right for you here on "mad money." i'm jim cramer, and i'll see you next time.

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