Click on Any Chart Below to Engorge It

Wednesday, March 7, 2012

When are Rising Oil Prices Bad for Stocks?

Not very often, as this chart attempts to show.  Notice the correlation plot in the bottom panel - any significant time spent below zero indicates a negative correlation between the price of oil and the S&P 500.  This has almost always been during a time of rising oil and a falling stock market over the past ten years of easy monetary policy.  The second half of 2006 is an exception, and that did not end so well.  For a more comprehensive explanation of the correlation between commodities and stocks, inflation / deflation, and what to look for at inflection points, please see Chip Anderson at Stockcharts.com.

No comments:

Post a Comment