Jim Cramer says a drop in oil prices could signal the start of a market rally

CNBC’s Jim Cramer on Thursday suggested the stock market could be headed for a rally, citing a downturn in the price of oil.

Crude oil prices fell Thursday after reaching their highest level in over a year. West Texas Intermediate, one of the three main benchmarks in oil pricing, declined more than 2%, and by Thursday’s close, the major indexes saw gains. The S&P 500 added 0.59%, the Nasdaq Composite jumped about 0.83% and the Dow Jones Industrial Average climbed 0.35%.

“Now, what if this rebound’s chimerical? As I told my partners this morning on ‘Squawk on the Street,’ look, you either believe it or you don’t,” Cramer said. “To me, this is how pretty good rallies start. Almost every rally I’ve ever followed that I liked, started just like this: A pivot up and then a break in one of the most bearish of indicators, the price of something, this time crude.”

Cramer highlighted Wednesday’s “intraday pivot,” as a reason for optimism about a potential rally. On Wednesday, the major indexes started the day worse off but were able to come back by the end of the session, cutting their losses.

To Cramer, a calendar shift can also have an effect, as September is usually a poor month for the market. However, Cramer conceded that this year has been particularly disappointing for the bulls.

“Fortunately, if the seasonal pattern holds up, then a nasty September could pave the way for a bountiful October,” he said. “Historically, the worse things are in September, the better they get in October.”