CNBC's Jim Cramer on Thursday advised that investors proceed with caution in buying stocks at current levels.
The major U.S. stock averages all made record closes during the session, moving up as much as 0.81% on the day.
"After another terrific day, you want to stick with stocks that are running on genuine good news, and not just because of late-to-the-party momentum buyers," the "Mad Money" host said.
There's not enough new information to justify the movements that many stocks are making, Cramer said. He warned that too much momentum buying carries stocks to overbought valuations.
"In a healthy market, stocks go up or down because of a change in the underlying company. You get something that boosts the company's earnings forecast and you can happily pay up for the stock," he said. "I mean, that's how you get a rally with staying power."
"But eventually you get to a point where the momentum takes over, where people start buying stocks simply because they believe those stocks are headed higher. And that's where I think we're getting to, if not reaching there today," he added.
Cramer applauded Apple's 2% run to a new closing high of almost $310. New information coming out about the company may require the iPhone maker to boost its guidance, which warrants the stock's climb on Tuesday, he said. IPhone sales in China surged more than 18% in December, compared to a year ago, and a Jefferies analyst raised the price target for the company's stock to $350 from $285.
"Apple's bursting through these price targets because in the last two days we've gotten new data … [that] indicates the company's earnings could be much better than expected," Cramer said. "When analysts boost their price targets for Apple on these kinds of stories, it's totally legitimate."
The host, however, decided to "draw the line" on the same firm's decision earlier this week to raise its target to $56 from $42 on Advanced Micro Devices. Cramer is not as bullish on the chipmaker since the stock's 48% rally to nearly $49 a share as of Thursday since its last earnings report in late October.
"Sure, AMD's executed on its new chips, demand is strong, the CEO Lisa Su is phenomenal and the competition from Intel remains subdued," but that's been true for months, Cramer said. "This upgrade is a late-to-the-party momentum call with little rigor to speak of."
Cramer was just as skeptical of two buy calls on Goldman Sachs. The stock jumped 2% in the session.
"In fact, my biggest fear right now is that the banks may not be able to make the numbers, that there may be estimate cuts," he said, adding, "I'm astounded by the amount of love the market's showing it right now. Much of it seems momentum-driven. People like it ... because it's going higher."
Disclosure: Cramer's charitable trust owns shares of Goldman Sachs and Apple.