#1 – A stock Cramer would buy at its current price.
#2 – A stock Cramer would buy if it pulled back.
#3 – A stocks Cramer would sell at a higher price.
#4 – A stocks Cramer would want to sell period.
Amid the rally, a stock that was once a #1 may become a #2. Also a stock that was a #3 often becomes a #4.
Therefore, in a big rally, Cramer will sometimes sell #2 stocks, assuming he'll get the chance to buy them back at a lower price in the future. Also he'll sell #4 stocks, simply because the market propelled the stock to a level at which he thinks it's time to exit.
Now, that's not to say this strategy is fail proof – it's not. "But it is an effective way to mostly buy lower and sell higher," Cramer said.
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