Cramer: 2 stocks at home outside the range

Some range-bound issues could soon begin to break out, the CNBC host says, particularly in aerospace and the financials.

By MSN Money Partner Jun 26, 2014 3:50PM
Credit: © Mike Blake/Newscom/Reuters

Caption: A Chevron gas station sign is seen in Del Mar, Calif.By Lee Brodie, CNBC

With only a handful of days left in June, Jim Cramer is scouring the market, looking for new ideas for the second half.


And as he sifted through a pile of earnings and other data, Chevron (CVX) grabbed his attention, largely because the stock just broke out of a trading range.


For the past year, Cramer says, Chevron had been stuck in a rut. "It was a stock that needed to be bought every time it dipped below $120 and then sold every time it got to the high $120s," he said.


However, earlier in the month that changed. Chevron broke out of that range, trading higher than $130.


And it's not just Chevron that's behaving this way.


Something very similar happened with PPG (PPG), Cramer said. "For eight months PPG dallied in the $180 to $190 area. Then about three weeks ago it broke out of that range and hasn't looked back since."


Cramer believes it's a very good sign.


That's because investors who closely follow chart patterns cheer when they see a stock pierce a level that had generated strong resistance. They call it a breakout and consider the resulting pattern a very bullish signal.


"In turn, they buy," Cramer said.


That's true, even if the stock is trading at a 52-week high or an all-time high; investors who follow technicals become so-called "buyers of the breakout."


And given the incremental improvements in the economy; a survey found the U.S. services sector in June expanded at its fastest clip in more than four years, Cramer wouldn't be surprised if other stocks that had been range-bound also begin to break out. In fact, he believes the phenomenon is about to happen imminently in both aerospace and the financials.


In both sectors, Cramer said, "There are many stocks that have spent a lot of time in the wilderness," meaning they've been range bound. However, as the economy kicks into gear, Cramer added, "I think they blast off" or breakout.


And as they break above levels of former resistance, Cramer thinks they, too, will attract new buyers, just like Chevron and PPG did earlier in the month.


Therefore if you're looking to put money to work in the second half, "I think aerospace and financials will be among the best places to find new ideas," Cramer said.


Editor's note: Cramer's comments on Chevron aired Fri., June 20. 


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Tags: CVXPPG
4Comments
Jun 26, 2014 6:01PM
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Time's up, MSN......Fire Cramer and hire the commentators...
we are cheaper, and probably a helluva lot more accurate too.
Jun 26, 2014 4:25PM
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I wonder if Bobo makes this guy wear his red nose and big clown shoes when he writes for him.

Jun 26, 2014 5:03PM
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At least we were able to minimize the damage a bit, don't forget these scumbags had us down triple digits and counting...Nevertheless the bad guys had another good day, the third this week and no doubt they will want to make it four for five tomorrow....That's why we have been advising caution all week long. We shall see tomorrow.
avatar
The world is about to hit an inflection point -- flipping from US to China domination.

Get ready for the collapse of the USA dollar folks. Owning stuff will not matter.

The Feds are about ready to trash the economy by jacking up interest rates to 21 percent

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