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Despite market highs, there's a correction in individual stocks, says Cramer

  • The stock market may be at record highs, but there's already been a correction happening in some individual stocks , CNBC's Jim Cramer says.
  • "What you have to do is look for individual breakdowns in stocks that should not have broken down," Cramer says.
  • Cramer says Illinois Tool Works and Lam Research are two examples.

The stock market may be at record highs, but there's already been a correction happening in some individual stocks, CNBC's Jim Cramer said Monday.

He said he's been looking for situations in the market "that don't make sense" versus the fundamentals. "What you have to do is look for individual breakdowns in stocks that should not have broken down," he said on "Halftime Report."

Cramer cited the stock Illinois Tool Works, a manufacturer of industrial products and equipment. "That stock was at $150 and then it dropped to $136 and then it went back," Cramer said. It was a move of more than 9 percent, which nearly matches the technical definition of a correction of 10 percent down from high recent highs.

Another stock is Lam Research, Cramer said. "The stock went down 15 straight points" after its last quarter, Cramer said. "It shouldn't have." Lam makes equipment and provides services to the semiconductor industry.

At a time when the U.S. stock market is hitting record after record high, investors are hoping for a strong earnings season and tax reform out to keep the rally going. The GOP unveiled its blueprint for tax reform last month. It calls for cutting personal and corporate tax rates and aims to simplify the U.S. tax code.

Cramer also said investors should be "short tax reform." He was using a stock metaphor to advise people to bet against tax reform from happening.

The plan has been met with repeated delays thanks in part to President Donald Trump, Cramer said. The most recent example was Trump decision to stop making subsidy payments to health insurers, which changed the focus back to health care, Cramer said.