For the first time in five years, crude oil and the S&P 500 are no longer positively correlated

Jay Soloff

Argonath Financial

For the first time in five years, crude oil and the S&P 500 are no longer positively correlated. According to Bespoke Investment Group, the oil/equities relationship had gone 1,327 trading days without seeing negative territory. Historically, the relationship has fluctuated fairly consistently between positive and negative. On one hand, a low oil price means lower costs (higher income). On the other hand, it could mean lower demand (lower spending). That's why the relationship doesn't remain stable, it just depends on the economics at the time. So why did we have such a prolonged period of positive correlation? My belief is that it's been far more important to investors to see signs of economic growth than in has in prior slumps. As such, even a sliver of higher oil demand has been deemed positive. Perhaps now, we've finally reached the tipping point. (VIEW LINK)

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Jay Soloff
Jay Soloff
Research Analyst
Argonath Financial

I'm an investments analyst for a US-based independent investment research firm. My focus is on economics, options, and all types of stocks, but especially tech, Internet, and renewable energy companies. I have experience as a options market...


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