Stocks-Crude Inverse Correlation Passes 2008 Levels, Just Off All Time Highs: Major Correction Ahead?
Stocks-Crude Inverse Correlation Passes 2008 Levels, Just Off All Time Highs: Major Correction Ahead? – Zero Hedge
The Writer
This post was written by MacAoidh on Monday, March 7, 2011, 15:38. MacAoidh has written 8059 posts on this blog.
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Quote of the day
Quote Of The Day, May 24, 2012
“I like PBS. I’d like my grandkids to be able to watch PBS. But I’m not willing to borrow money from China and make my kids have to pay the interest on that, and my grandkids, over generations, as opposed to saying to PBS, look, you’re going to have to raise more money from charitable contributions or from advertising.”- Mitt Romney
A week ago we presented the suddenly surprising inverse correlation between stocks and crude, commenting that: “the last time WTI to Stocks hit a correlation of -0.5 is just after the market peaked in late 2007, early 2008, as the market had started its decline which culminated with the global sell off of everything not nailed down, bringing the S&P to 666. The correlation between the two assets is again -0.5. If Brent confirms the WTI correlation, it may be time to run.” Subsequently every chartist jumped on this observation, yet it is today’s update that is material significance: as of a few hours ago, the inverse correlation between the Brent front month has just passed the lows recorded in 2008, just before the market tumbled, when increases in oil prices no longer produced increasing stock prices (i.e., market topping). In other words, “it is now time to run” as we have just surpassed that level. And in fact, a longer term chart shows that we are just off the all time lows in the MSCI-Brent correlation. If this series continues dropping a correction is virtually assured.
As I’m typing this the Dow is off 220 points today and has fallen below
12,000. So we’ll see.