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Sell Block

There’s a right way to watch Mad Money and a wrong way to watch Mad Money.

Home Gamers have to think before they buy. Cramer would never recommend running out and buying a stock on the trading day after he gave that stock a thumbs-up. Investors always have to do their homework. They have to be patient. They have to wait for weakness in share price before pulling the trigger.

So anyone who ran out and bought Coca-Cola, United Technologies or Johnson Controls – all of which were recommendations from last week’s Game Plan – on Monday morning made a huge mistake. All these stocks were up a point or more, probably because immature investors were buying blindly with market orders.

Google , one of Cramer’s four horsemen of tech, reported a bad quarter, and the stock is down big. He called it an “out and out miss,” saying that he doesn’t know if it’s a buy – most likely not. But this is the first bad quarter the company reported, so he needs time to digest the news.

You have to be willing to take a pass if the circumstances aren’t right for buying a stock. And please ALWAYS use limit orders. Take JCI, for instance. Cramer would have placed a limit order priced at $121 for the stock and passed on anything more. If you’d done that, you’d be at breakeven on the stock. Then you could have let other picks from last week’s Game Plan, like Schlumberger, do the work for you.

And, yes, Johnson Controls blew the quarter even though Cramer was bullish on it. He’s not giving up yet, though. It’s still a buy as far as he’s concerned.

It was too tough a week for the banks. They came out swinging like Cramer said they would, but the rumor mill was too strong. Unless you’ve got a strong stomach, he doesn’t recommend you own financials right now. Even Goldman Sachs probably won’t bottom until it hits $200, he said.

Oh yeah, one last word of advice: Don’t get greedy. If you’ve enjoyed some big gains this year, at least take the money you put into the stock originally off the table. Just use the house’s cash if you’re going to play on.

Bottom Line: Always use limit orders, know that it’s sometimes right to take a pass on a stock, stick with JCI and give up on the banks if you can’t stomach the risks.

Cramer's charitable trust owns Goldman Sachs.

Questions for Cramer? madmoney@cnbc.com

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  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

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