Oil sector stocks have taken a beating since the Gulf of Mexico spill began 43 days ago, but were "annihilated" Tuesday following news that the spill might not stop for months.
"This group is being treated like the nuclear construction biz at the time of Three Mile Island, just hammered like there’s no tomorrow," Cramer said. "I don’t want to downplay a spill that’s going to see the whole gulf coast from Louisiana to Florida covered in oil, but I do think the market’s over-reacting."
Cramer doesn't think the crisis is an "earning apocalypse" for oil service plays, but said the market will continue to punish the sector. He thinks the fundamentals don't apply in the short-term when the sector is getting pummeled by negative headlines and faces increased regulation by a US government responding to the disaster in the Gulf.
So how do you play this sector? Cramer turned to Dan Fitzpatick, a widely regarded analyst on Wall Street, who interpreted the charts of the Oil Service Holders ETF, the OIH. Watch the video for the technical analysis.