Oil and stock market correlation

Posted: January 27, 2016 in Uncategorized
Tags: ,

I examined long term the relationship between oil and stock market.

The correlation is there, but sometime it is “in range” instead of directional.

Let me explain

The markets really likes oil being between $75 and $112.

It has a positive bias until $40.

Under $40 or over $112 is incrementally negative.

The current status of the market so is negative and if oil goes to $20 or even $10….a bloodbath would ensue.

What is the consesus on oil from the oil traders and commodities futures?

A bottom in late February/March around $25/$20 and then a recovery around $50/$47 by October and December around $40.

So we can extrapolate for the market an overall weakness for the whole of 2016.

A crash would occur late February/ early March taking out the current low, which would be a perfect moment to buy.


All this reflects a Chinese market bottom around 2,500/2,400


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