Jim Cramer: How to Use This Market’s Strength

This is a case-by-case market, not one that’s driven by averages, “Mad Money” host Jim Cramer said Wednesday. That’s why he thinks it’s important to focus on individual stocks.

“This is an excellent moment, only a couple percentage points away from the market’s highs, to go over what you own on a case-by-case basis and decide what might be too high versus other stocks in the same area,” he said, “or might not be worth owning because they simply aren’t doing that well and their weakness is being masked by the overall numbers.”

Stocks ended higher Wednesday amid optimism over Greece’s bond swap and better-than-expected economic reports. However, Cramer noted that the action in individual stocks makes his case.

There were winners and losers in the semiconductors, for example. Cypress Semiconductor lowered guidance after the bell Tuesday and fell 3 percent in trading Wednesday. Qualcomm and Broadcom, on the other hand, are both saying positive things about the business.

The same divergence can be seen in telecom equipment names, the oil service sector, apparel group, drug stocks, the rails, and gold stocks. However, some stocks did trade together – like housing, thanks to rumors that the Federal Reservemay take more action to lower interest rates, and banks. While it may be confusing, Cramer said a stock-picking market is actually good because it transcends the major issues that could bring the market down.

His advice?

“I think you use this strength to sell the ones that deserve to be down, or ones that have had a gigantic run … and be ready if we do catch another across-the-board sell-off like [Tuesday],” he said.

Call Cramer: 1-800-743-CNBC

When this story was published, Cramer's charitable trust owned Broadcom.

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