CNBC's Jim Cramer has noticed a "bizarre dichotomy" between how the chip stocks and the stocks of their suppliers are trading, and it's starting to concern him.
While shares of the semiconductors have been roaring, surpassing a key hurdle Cramer flagged on "Mad Money" last week, shares of the industrial companies that supply the chipmakers have "been crushed," Cramer noted Monday.
In fact, DowDuPont, 3M, Illinois Tool Works and Honeywell — all of which make supplies for the semiconductor industry — flagged their technology divisions as areas of weakness this earnings season. At the same time, their customers — companies that make the equipment for building chips, like Lam Research — essentially called a bottom in tech.
"You've got to wonder, isn't this a dangerous contradiction?" Cramer said. "How can Lam be bullish on this business when 3M, Honeywell, Illinois Tool Works and, most importantly, DowDupont are so bearish?"
For investors, Cramer's rationale for how to proceed was fairly simple.
"If this rally in the semiconductor cohort is right, if it's accurately forecasting the future, then you want buy Honeywell," he said. "But if the semis are wrong, look out below, because I think these industrials could have even more downside and the semiconductor stocks will get slammed, too."
Cramer argued that it would take a lot for the chipmaking stocks to revisit their recent lows, especially since most of the companies have already issued their earnings reports. That lowers the risk of negative, Nvidia-like pre-announcements, he said.
He added that the industrial suppliers could have been excessively negative on their prospects. But he still did not recommend investing in DowDuPont, which he said "has too many problems" here, Illinois Tool Works due to its exposure to the weakening auto sector, or 3M given its lingering risk.
As for Honeywell, Cramer saw "very few glitches, and some huge positives" tied to aerospace, climate controls and warehouse automation in its most recent quarter.
"The thing I found most worrisome about Honeywell's quarter? Yep, you guessed it, their semiconductor materials division, which had an unexpected downturn," he said.
Cramer's conclusion? Those who are worried about the fate of the chipmakers should steer clear of these two spaces, and those who are bullish on the semiconductor rally should invest in Honeywell.
"At least with Honeywell you have other, more solid businesses to protect you from the downside if it turns out that the worst isn't over," he noted.
The VanEck Vectors Semiconductor ETF was up 0.49 percent as of Monday's close, falling slightly in after-hours trading.