One of the easiest ways for Cramer to identify the stocks that should be on his radar is to look at the new-high list.
These are stocks that hit a new high in trading for the day, especially on days when the market is in bad shape. If a stock hits a new high on a down day, then obviously it has something good going for it.
When a stock hits the new-high list, it is either because it is part of a bull market, it announced fantastic earnings or the sector has tremendous sales momentum.
However, that doesn't mean Cramer recommends chasing after every stock on the new-high list. That would just be completely ridiculous.
The list is merely meant to serve as a jumping off point for stocks to start watching. Homework is still key to ensure that the fundamentals of the company are strong.
Cramer has one exception to his rule, which is that if you see insiders buying a stock when it is already up a lot that is a green light.
"It's a rare thing to see happen, but in my experience it is rarer still that this method of picking stocks doesn't work out," he added.
When insiders are getting in on a stock, it is a great sign that they have confidence that the stock is about to take off, or that it will be long lasting.
Keep in mind that most insider trading in small quantities is meaningless. Sometimes an insider will start buying stock because they want to give the impression of confidence. That is why when there is a colossal amount of buying, Cramer wants you to take another look at the stock.
However, Cramer warned that these signals alone are not a good reason to buy a stock. At the end of the day, there is no avoiding doing the homework on a company. That means checking the fundamentals and making sure the company has a story that you can get behind.