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Job opportunity: Cramer’s non-farms jobs strategy

(Click for video linked to a searchable transcript of this Mad Money segment)

Jim Cramer watches economic data like a hawk; the data is an important component of the homework he so often talks about. And of all the economic releases, Cramer has found that nothing matters more for stocks than the jobs report.

"Absolutely, nothing can stoke a bull market or give bears more reason to roar," Cramer said.

And after sifting over years of data and examining the ways in which the market moved in response to both good and bad reports, Cramer has found some interesting patterns that could help you leverage the action.

If the jobs number is better than expected...

Cramer wants you to stay on the sidelines for at least 90 minutes. Really!

The jobs number is typically released at 8:30am, but, "If you wait until after 10 a.m. on the day a strong jobs report comes out, you will almost always get a better price than you would at the opening," Cramer said on "Mad Money."

In other words, buying right away can be a mistake. The reason?

"After a good payroll report there's often a huge amount of short-covering in the first half-hour of trading," Cramer explained.

Caspar Benson | Getty Images

Short covering is a phenomenon in which pros who borrowed stock and sold it into the market at some earlier time, buy back shares and then return them. It often happens when fundamentals such as better employment numbers, call their bearish thesis into question. However, that very specialized type of buying – short covering - is typically short-lived on a jobs Friday.

"Once that buying is done, you tend to get a vacuum and the market begins to decline," Cramer explained.

Therefore, if the jobs report confirms the economy is strong and as a result you want to buy a stock, "Wait for that modest decline that tends to come after 10am before you do your buying."

Cramer believes that strategy will help you get the best possible price for your favorite stocks, while still allowing your thesis to be confirmed by this critical piece of economic data.

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If the jobs number is worse than expected...

When the market is disappointed by the jobs number, the reaction can be unpredictable. "Any disappointing employment number can generate a lasting impact that leaves weeks of declines in its wake," Cramer found.

And if its followed by a further bad number, watch out.

"After a series of weak jobs report, the market will want to see 3 months of stability before the drift lower comes to an end," Cramer added.

Under this scenario Cramer advocates revisiting your investment theme. The weakness can trigger a rotation into defensive stocks. However, if you've done homework and you believe in your stock choice, the resulting selloffs can present opportunity.

As long as the fundamental thesis remains in tact, Cramer believes selloffs are to be embraced, even if the selloff was triggered by bears hoping to leverage a weak jobs number.

The preceding insights are discussed in far greater detail in Jim Cramer's new book Get Rich Carefully.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

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