The following is a study of SP500 action compared to copper and OIL.
It is clear form the chart, from a macro-economic point of view, that we are already in bubble territory.
Question is how much can it last and how can we profit from it, both sides.
The two last bubble we had in 2000 and 2007 lasted respectively 4 and 1.57 years, extending this divergence with copper as shown in the chart. Today's bubble has theoretically lasted for 2,62 years (bearing with with copper exclusively)
On the other hand since the last decade, OIL prices have been exercising pressure on stock prices every time hits the blue area box.
But this has not been having same effect on the third signal we had in august, abnormal price action has clearly been confirmed by intensifying negative correlation to copper. Even if this divergence can last as long as it wants, extreme negative correlation with copper has resulted in the same result (point C in chart), even during the tech bubble. this signal is triggered with correlation crossing neutral zone (0) on chart.
As a matter of a fact, every time this has happen at point C, prices have dramatically corrected regardless of bubble territory, after what it chooses to continue its excessive evaluation (case of tech bubble) or correct even more (case of 2007 subprimes). So this is the trigger, and prices should at least retrace to MA50 weekly (46 weeks or so since the last test of this MA), this will certainly correspond to lower BBand weekly and MA200 daily. CHEERS!
It is clear form the chart, from a macro-economic point of view, that we are already in bubble territory.
Question is how much can it last and how can we profit from it, both sides.
The two last bubble we had in 2000 and 2007 lasted respectively 4 and 1.57 years, extending this divergence with copper as shown in the chart. Today's bubble has theoretically lasted for 2,62 years (bearing with with copper exclusively)
On the other hand since the last decade, OIL prices have been exercising pressure on stock prices every time hits the blue area box.
But this has not been having same effect on the third signal we had in august, abnormal price action has clearly been confirmed by intensifying negative correlation to copper. Even if this divergence can last as long as it wants, extreme negative correlation with copper has resulted in the same result (point C in chart), even during the tech bubble. this signal is triggered with correlation crossing neutral zone (0) on chart.
As a matter of a fact, every time this has happen at point C, prices have dramatically corrected regardless of bubble territory, after what it chooses to continue its excessive evaluation (case of tech bubble) or correct even more (case of 2007 subprimes). So this is the trigger, and prices should at least retrace to MA50 weekly (46 weeks or so since the last test of this MA), this will certainly correspond to lower BBand weekly and MA200 daily. CHEERS!