Here's a longer termperspective of the price of the stocks against the price of oil (USOIL) with my comments.
What I see are multiple zones that are worth looking at closer. On a shorter term time frame, the financial markets can tie together as funds flow through them simultaneously. On a longer term basis, one market can weigh on the other or, in other cases, serve to boost the other. The other rare occasion is when we have a near melt-down in the economy and both markets recover simultaneously to indicate that disaster was averted.
I think the last six years are well shown in the graph and I thank the user "Technician" for publishing a chart on this relationship going back to mid-2010 today, which was on the front page "Idea of the Day" entitled "SP500: Approaching Bubble Territory?? Part 3: First Attempt"
If you look at the first green zone I have labeled where falling oil prices lifted stocks. That is very clear to me. In the next zone, RED, rising oil prices slowly take a toll on stocks and then stocks plummet, followed by crude oil plummeting to catch up the S&P. The next zone is BROWN to reflect that both markets were running together in a revival stage of the economy and markets with massive Government stimulus added. The next zone is RED as rising oil puts a damper on stocks. The next is GREEN where steady to lower oil prices is providing a stimulus to the overall stock market.
I hope the graph is visually instructive. I like when a chart is visually appealing and is also instructive or tells a story all by itself. What also jumps out at me is that the ZONE's are roughly the same duration.
Here's wishing for many more trades that set-up clearly so that we can all make some money together.
Wish you all well.
Tim
11/13/13 2:05PM EST
Tim
Comments
Technician
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Great Secular View, insight. Really. Its amazing how shifts in correlations themes occur from time to time, depending on economic and financial conditions.