Wednesday, July 27, 2016

Oil Is Down 20% From Its Recent Peak - That Typically Leads Stocks Lower INDEXSP:.INX

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*We have been expecting down oil for the last few weeks.
*We recently showed how peaks in oil lead peaks in stocks.
*That lead seems to be dropping further which reminds us that stocks also can go down.

We became bearish in oil July 11thWe recently showed how major peaks in oil have led to major peaks in the stock market. We have been bearish on stocks for some time and we don't see the follow through after the hugeshort squeeze post-Brexit. As we watch oil drop further we think the oil-market relationship will be in effect. The longest it has recently taken to drop markets is two months.
We showed this chart recently which shows how oil peaks lead stock market peaks (NYSEARCA:SPY).
The blue line is oil (NYSEARCA:USO)(NYSEARCA:OIL)(NYSEARCA:UWTI) and the red and green line is the S&P 500. You can see the white lines from the blue line to the S&P 500 above it are all leaning a little. None of those lines are perfectly vertical. They all lean to the right at least a touch. That says oil leads the market.
The more oil drops the more oil's peak looks very clear. The more that peak looks clear the more we expect this relationship to hold.
Why should oil lead the market?




Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. #in, $spy, $qqq, $iwm, $vxx, $ycs, $fxe, $EUO, $YCS, ^GSPC, INDEXSP:.INX, #elazaradvisorsllc, CME Globex: ES Disclosure: These trades can lose you money and principal especially when using leverage BY USING THIS SITE YOU AGREE TO TAKE ALL RESPONSIBILITY FOR YOUR OUTCOMES AND LOSSES AND HOLD BESTIDEAS, ITS CONTRIBUTORS AND ELAZAR ADVISORS, LLC HARMLESS