Temporary Dips in Oil Present Buying Chances for S&P Stocks, Cramer Says

Oil prices have rallied steadily since bottoming in February, and well before the markets opened Tuesday futures rose as high as $48.41 per barrel, their highest mark in 7 months. 

The rising tide, along with a drooping dollar, may be be playing a role in a modest boost today for oil and gas related stocks such as ExxonMobil (XOM) - Get Report, Chevron (CVX) - Get Report and Occidental Petroleum (OXY) - Get Report. 

But what is absolutely apparent, according to Jim Cramer, TheStreet's founder and manager of the Action Alerts PLUS portfolio, which owns OXY, is the fact that oil is driving the S&P 500 Index I:GSPC, along with other markets. 

The S&P, in particular, rallied Monday, reaching a high of 2071.84 points, but the index was down nearly 0.5%, or 10 points, to 2,056.72 around midday Tuesday. 

"[Oil] is all that really matters because we're in a very thin market," he said Tuesday. "And in a thin market, what happens is there are mathematicians, PhDs, who look at correlations over the short term and say if oil is up, the S&P goes up.

"So they literally see oil up and then they buy S&P futures," he continued. "That's what moved the market yesterday. We're in the grips of it, it's not changing."

But if the markets are leaning so heavily at the moment on a volatile commodity such as oil, investors may wonder whether sitting on the sidelines for the time being is the safest bet.

According to Cramer, however, biding your time hoping for a more stable commodity environment is not the right move.  

"[Individual investors] have to use the declines in oil, which then precipitate the declines in the S&P, to buy the stocks that they like of companies they like that you wouldn't get so cheaply if it weren't for the fact of what I regard as a bogus long-term correlation, but a true short-term correlation."