Jim Cramer regards semiconductor stocks as rocket fuel for the averages.
"When the semiconductor group is in bull-mode, that is a terrific pillar the rest of the market can lean on as it continues to rally," the "Mad Money" host said.
The good news is that the semis could be in a position to push the market even higher, according to the charts.
Cramer spoke with Bob Lang, a technician and founder of ExplosiveOptions.net and colleague of Cramer's at RealMoney.com. Lang took a close look at the charts of Intel, NXP Semiconductors, Skyworks Solutions and Qualcomm to determine if they were ready to roar.
Intel's rally in the past few days was triggered by a bullish upgrade from Bernstein and a price target increase from RBC. But when Lang looked at Intel's moving average convergence divergence (MACD) indicator, it told a different story.
At the beginning of the month, Intel's MACD flashed a buy signal, where its black line crossed above the red one. The stock has been roaring ever since.
Additionally, the Chaikin money flow oscillator, which measures buying and selling pressure, has been positive since late May, even during the Brexit sell-off. This suggested to Lang that big institutional money managers have been buying the stock heavily.
Once it breaks the $35 a share level, he believes it could have a lot more room to run. It closed Tuesday just under $35.
NXP Semiconductors is a favorite of Cramer's for the long-term because it benefits from the connected car and the internet of things. The stock flashed a notoriously negative formation when it made a head and shoulders pattern from May to June. Lang thinks the stock is now trying to make a recovery, with the MACD on the verge of a bullish crossover.
"You know my view: If you like it at $82, you should like it even more at $80," Cramer said.
Qualcomm is the semiconductor that powers smartphones. The stock has been in a tight trading range since February, but Lang expects it to break out.
At the end of May, Qualcomm's chart had a golden cross pattern, where the short-term 50-day moving average crosses above the long-term 200-day moving average, a pattern that is widely regarded as bullish.
Lang indicated that Qualcomm's stock has everything it needs to break through its ceiling of resistance at $55 a share and head higher. Cramer prefers Intel, though, because he says Qualcomm is losing Apple market share to Intel.
"If Lang is right that the semiconductor stocks are ready to roar, then that would be a huge positive for the overall stock market, not to mention the semis themselves, which could be part of the fuel needed to take this market up to even higher levels," Cramer said.