Cramer explains how to recognize “great moments” like Friday's session

CNBC Jim Cramer reviewed Friday's market action, calling the session a “great moment” in which stocks opened weak but averages rose toward the end of the session. While he said that this particular moment has already passed, he listed ways that investors can recognize such a moment in the future, saying that such conditions could bring big profits.

“We used to call days like today 'great moments.' These are the moments when bears overreact because they don't know when to back off,” he said. – We had one this morning.

After a difficult week on Wall Street – Dow Jones Industrial Average fell by 1,100 points in one session and recorded the longest losing streak in about 50 years – index bounced back on Friday. The 30-stock Dow gained 1.18% to end the week, while the stock index S&P500 increased by 1.09%, a Nasdaq Composite added 1.03%.

According to Cramer, these “great moments” happen when the market is selling. To spot market conditions, he said he uses MarketEdge's S&P oscillator, which displays information when there are too many buys or sells. Cramer added that these “great moments” come when bearish investors show “overconfidence,” saying that key stocks on Friday Palantir, Apple AND Nvidia drop at the beginning of the session for no apparent reason.

Investors should also watch for positive economic data as the market sells off, Cramer continued. He suggested that part of Friday's gains were due to cooler stock market data price index of personal consumption expendituresAND key metric for the Federal Reserve. Finally, he said, it's important to pay attention to news that counteracts the catalyst for the downturn. Investors balked when the Fed indicated it would make fewer interest rate cuts than expected next year. But on Friday, one Fed official said he was encouraged by the PCE report and said interest rates could continue to fall even as the central bank remains cautious.

“It was actually a great moment this morning,” Cramer said. “They don't come around very often. But when they do, you have no choice but to pounce.”

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Reservation CNBC Investing Club Charitable Trust owns shares of Nvidia and Apple.