With U.S. stocks on the climb thanks to bullish institutional buyers, CNBC's Jim Cramer figured investors would start to get hesitant about buying into a market that's heating up.
But after consulting technician Rob Moreno, the "Mad Money" host concluded that that would be a mistake.
"There's a lot to like about this environment, and more importantly, there are plenty of stocks that still haven't really run very much," Cramer said. "That's right, we've got a bunch of laggard stocks that could soon break out to higher levels."
One stock that exemplified this theory was that of Edwards Lifesciences, a Cramer-fave medical equipment maker that specializes in artificial heart valves and blood pressure monitors.
Shares of Edwards hit a fresh 52-week high Tuesday, closing at $148.52 a share after several months of up-and-down trading. The company's April earnings report missed expectations.
But Moreno, the publisher of RightViewTrading.com and Cramer's colleague at RealMoney.com, spotted some signs of life in the health care play.
Turning to the stock's daily chart, Moreno noticed that "while it's been consolidating, it's also made an inverse head-and-shoulders pattern," Cramer said.
"For those of you who don't remember, an inverse head-and-shoulders is not an upside down bottle of shampoo," the "Mad Money" host continued. "It's a formation that looks ... a little like an upside-down person — a head between two shoulders — and the important thing is that this one is one of the most reliably bullish patterns in the book."
To ascertain how far Edwards' stock could still run, Moreno measured the distance between its lowest lows (the "head") and the "neckline," or the line connecting the two "shoulders."
For Edwards, the distance came out to roughly $23, meaning that once its stock broke out above the "neckline," it could still rise by $23 a share.
To Cramer's delight, shares of Edwards broke above the "neckline" level Monday, rallying another 1.54 percent in Tuesday's trading session.
Better yet, Moreno pointed out that its moving average convergence-divergence indicator, which helps technicians spot changes in stocks' trajectories before they happen, is on the rise, maintaining the bullish crossover it made in late May.
"You may think this stock is getting away from you, ... [but] based on the inverse head-and-shoulders pattern, Moreno thinks this thing could be headed to $166 before it runs out of steam," Cramer said. "After marking time for a couple of months, this looks like the next leg of Edwards' long-term rally happening right here, right now."
