Cramer: Time to buy oil into weakness?

With crude prices threatening to go into complete free fall and Kinder Morgan butchering its dividend, Jim Cramer decided to take a closer look at what could be next for the oil business.

Could it be possible that Wall Street has become too negative on this group?

To find out, Cramer turned to the help of Suz Smith, a technician, portfolio manager at Milestone Wealth Strategies, co-founder of ExplosiveOptions.net and colleague of Cramer's at RealMoney.com.

Smith made a very bold contrarian call on oil. She thinks sentiment surrounding crude has become so negative that some stocks could rally from here.

"I know that right now people are terrified of all things oil. But when everyone else is panicking, it often pays to be opportunistic about high-quality merchandise"

However, Smith did not say that means to rush out and start stockpiling oil stocks. She did not say that investors should buy a full position right now in the major integrated stocks. But she does believe that the negativity is overdone in the sector.

On Monday, the Daily Sentiment Index for crude was at 6 out of 100. The last time people were this pessimistic about oil was back in August, when there was a big meltdown followed by a rapid rebound in both the commodity and oil stocks.

"That is why Smith thinks you need to view this moment of panic as an opportunity to gradually buy high quality oil stocks into weakness," Cramer said.

Smith was particularly interested in the performance of Exxon Mobil, Chevron and ConocoPhillips because of an interesting divergence she noticed in the between the price of oil and their charts. She saw that despite the fact that the price of oil has been blasted lately, they are all trading well above the levels they were at when prices plunged to $40 in August and October.

To Smith, this action suggested that there is good strength in these major integrated oils, and that the institutional money managers seem to be sticking with them. That means that when the panic is over, these stocks will rebound dramatically.