Why raging semiconductors are just getting started

Jim Cramer doesn't even need to look at a chart to know that tech stocks have been roaring recently. Even the semiconductor space has taken off, with the Philadelphia Semiconductor Index reaching highs that have not been seen since 2001.

Can the semis keep roaring, and what is the best way to make money off of this trend?

To find out, Cramer turned to Bob Lang, a technician and founder of ExplosiveOptions.net, as well as a colleague of Cramer's at TheStreet.com.

In order to take the pulse on a broad scope of the industry, Lang looked at the monthly chart of the Market Vectors Semiconductor ETF, or the SMH. Lang thinks this chart is important, as it shows how the semiconductors have been making their way higher and higher for years and have led the market since 2009.





As for the future, one thing that Lang noted on the SMH weekly chart was a pullback that occurred last year that sent it down to its 50-week moving average. Lang wants investors to keep their eyes out for this going forward, as it was an amazing buying opportunity.

Additionally, Lang thinks this could be just the beginning. He saw that after a three-month consolidation, last week the SMH hit an upside breakout on strong volume. Lang sees this as the beginning of the next leg to a semiconductor rally.

"You know we don't like to play with ETFs that give you the whole sector, including the good, the bad and the ugly, which is a great movie but a terrible stock picking strategy," said Cramer.

So what stocks does Lang recommend?

He is seeing signals that indicate a semi like Broadcom is due for a pullback in the short term. Lang recommended $44 as an ideal entry point for the stock.

Lang also recommended the long-time Cramer fave Cypress Semi. Not only does this stock have an awesome 3 percent yield and a pending game-changing merger with Spansion. The stock has been trading sideways, and now the 50-day moving average on the charts has caught up to its share price. A move that Lang thinks means it is ready to go higher.

Then there is Intel, which Lang sees a bullish W pattern currently. He believes that if the stock can cross over the ceiling of resistance of $35, it could go higher.

"I think this has created a good buying opportunity because Intel's actually doing an excellent job of diversifying away from the PC, and the company's management is all about UPOD—under promise and over deliver," said Cramer.

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So while the semiconductor group has been the sector leader for the market recently, don't give up on it and assume it's done. The charts are predicting it could have more room to run.

"My view? Stick with the best of the semiconductor space, like Intel and Cypress Semi on its terrific merger with Spansion," said Cramer.

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