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Cramer: Oil just made a scary move—I'm taking the other side of the trade

With worries of a Brexit and falling oil prices on his mind, Jim Cramer is ready for anything. But there was one event that caught his attention on Thursday, which made him confident that crude isn't likely to fall much further.

"We don't know which way the Brexit vote will go, but feel better about it not happening. We don't know oil, and I'm saying don't give up the pipe," the "Mad Money" host said.

Cramer often refers to $50 as the breakeven price for oilfields in the U.S. When crude hits that level, companies that have drilled wells and then capped them, will suddenly begin to drill again. Additionally, many cash-strapped oil producers sold oil futures at a premium to $50 to raise money and pay the bank.

When oil initially rallied to $50 there was a surge of optimism in the oil patch, confirmed by the commentary from Continental Resources CEO Harold Hamm, who suggested that oil could travel back to the $60 to $70 range. Since that time, selling pressure has pushed the price of oil back down.

But then something happened on Thursday that really freaked out the big oil players.





Crude oil sprays from a well bucket
Ulet Ifansasti | Getty Images
Crude oil sprays from a well bucket
"If I am right that crude is basically done going down, then that should make investors more bullish." -Jim Cramer

Pioneer Natural Resources purchased 28,000 acres in the Permian Basin for $435 million from Devon Energy. It also immediately announced plans to increase drilling by 42 percent, bringing its rig count to 17 from 12

Considering that the price of oil was hammered last Friday when the Baker Hughes rig count showed just an additional three rigs coming online, the news of Pioneer pretty much crushed the hopes of anyone who believed oil would go back to $60.

Even worse, Pioneer raised $827 million by selling 5.25 million shares at $157.52 in a secondary offering. That prompted investors to sell Pioneer's stock, and it closed down more than 5 percent. Now Cramer wants to take the other side of the trade

"I think that Pioneer's opportunistic move implies that its stock is expensive, but oil is cheap," Cramer said.

If oil prices rallied on Thursday, stocks would have gained as well. However, the market didn't seem to care that Pioneer's stock tumbled Thursday.

"If I am right that crude is basically done going down, then that should make investors more bullish. Combine that with a possible no-vote against the U.K. seceding from the European Union, and this market's got a terrific chance to rally," Cramer said.

So, that left the question of what stocks to buy. Cramer looked back at the Federal Reserve's commentary on the state of the economy. He took into consideration that multiple rate hikes are not likely to occur, the economy has gotten softer, and that investors don't need to fear the rise in inflation on the consumer price index.

Additionally, if the Fed does not raise rates, than there won't be pressure on the dollar to go higher or a rush into bonds.

Cramer selected classic growth stocks that aren't concerned with a strong dollar, such as Johnson & Johnson, Bristol Myers and Merck.

He also recommended high-yielding technology stocks with a clear growth path and not too much risk, such as Microsoft and Cisco. He also liked growth utilities like AT&T and Verizon.

Cramer warned to stay away from high-growth gold and not to get too aggressive, because a Brexit could change things by the minute.

"Don't take on a lot of risky stocks here. The reward may not be as great as the risk if oil slices through $45 and the Brexit vote goes badly next Thursday," Cramer said.

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