I grabbed the last four times the crude oil (USOIL) market bottomed and plotted what the S&P500 (SPY) did until crude oil peaked.
1. The first is 1993, December 2. The second is 1998, July 3. The third is 2001, November 4. The fourth is 2009, February
I made this chart originally with USOIL divided by the US Dollar and decided to just keep this chart labeled that way. It doesn't impact the chart meaningfully.
You can see that the current stock market is well ahead of the past average stock market rally.
I plotted an "average" rally (using my own estimate of the average) which shows the market going steadily upwards for the next 2 years to a level of 240 in the SPY.
This cycle we have quite a different background than we had during previous cycles, but with plenty of central bank liquidity and low interest rates around the world, even Negative Interest Rate Policy (NIRP), the balance is off this time.
Either way: I always try to provide a different perspective of how the markets are positioned using my analytical and visual abilities.
Check out my other past charts on crude oil and the stock market as they also provide unique perspective.
Cheers,
Tim
3:58PM EST 4/21/2016
Comment
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Decent:
Tim September 4, 2018 12:08AM EST
Comments
alex.a
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Amazing this is free ~ Thank you sir!
MarkLangley
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Always enjoy your insight and the manner you explain your methodology and as you say n alternative perspective allowing others to think outside the box on their own individual approach ...keep them coming
couches
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Like you said, there may be something unusual about this cycle. It'll be interesting to see how commodities couple back with stocks.
davemojo82
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Is that just a volume indicator on the right hand side of the chart, horizontally?
Alekznder
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All about context! Love it
A-shot
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Im not sure how to read this, but this goes against your projection of having a sideways to lower market end for 2016 as majority seems to go up?
Also regarding Usoil, it is sitll below the level for that volume spike, so still not out of the woods? In any case, this plays out only if it is a bottom in oil, but is it a sure bottom?
cryptogamblr
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What makes you think oil has bottomed?
timwest
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A number of factors: Defaults and Bankruptcies in the energy space for starters. Stocks go down in anticipation of the news, then they bottom along with the news.
eskgroup
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thx for sharing bro! always nice to see your thoughts...
nahidik
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Tim I like your thought process here but I am not sure oil has bottomed out. It is at a determining point in IMHO. Using a similar idea of looking at the past to predict the future we do not need to go back very far for this pattern.