Cramer gives his opinion of Disney’s career and shares some of the market pitfalls to avoid

CNBC’s Jim Cramer on Thursday shared common mistakes investors make during big market moves, especially during a rally.

On Thursday, the Dow Jones Industrial Average rose, closing more than 52 points higher. The index had sharply pared an earlier high of more than 450 points. Disney’s rebound of nearly 5% after earnings, plus weaker-than-expected inflation numbers, helped lift the 30-share Dow Jones index.

Cramer advised investors not to make any major decisions based on a single data point, especially one that approximates estimates. If investors decide to buy, Kramer recommended making limit orders instead of market orders.

“Market orders put you at the mercy of an unforgiving market,” he said, and suggested investors stick to limit orders to protect against radically overpaying for shares.

Cramer also explained why he thought Disney was a “textbook winner” on Thursday. He said stocks that are able to rally in the midst of a sell-off are usually value stocks. Cramer believes Disney was able to reverse the trend in part because of CEO Bob Iger’s confidence despite its mixed earnings report.

“When almost all the other stocks were falling off their highs, Disney stocks slowly began to advance, step by step, inch by inch,” Cramer said. “When you see this kind of action, you know something special is going on, because this is a stock capable of defying the allure of the average after being cut in half over the past two years.”

Cramer ended up telling investors that market moves inspired by new data points can be fleeting and don’t always change the prevailing direction in the market. For Cramer, the current trend in the market is to sell shares of large-cap technology companies.

“But the bottom line? I can tell you that when you see the technologies coming together as part of a mass movement like we did in the opening, that will result in a rout later in the day when the market changes direction,” Cramer said. “Then you use that guidance to identify new batting winners.”

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Disclaimer Shares of Disney are held by the CNBC Investing Club Charitable Trust.