Research Excerpts

Falling Oil Prices Are Bad News For US Equities

Posted on: Wednesday, September 26th, 2012

The following (green highlights) is an excerpt from Monday’s Keys To This Week report, which is a detailed weekly outline of key market factors and corresponding charts pertaining to the US stock market and market sectors, US interest rates, and the US Dollar, that are most likely to influence US financial market direction during the upcoming one to several weeks.

excerpt from our Monday September 24th Keys To This Week report
Key #10 of 12 pertaining to the US Stock Market

Key # 10> Intermarket Analysis: Crude Oil Prices. TURNING NEAR TERM BEARISH? Chart 3 below displays NYMEX crude oil daily since 2011 and points out that oil prices have recently tested and reversed lower from major overhead resistance at 98.12 to 99.80, representing the 200-day moving average (major trend proxy, orange) and 61.8% retracement of the March to June decline, and are now trading below the 50-day moving average (minor trend proxy, blue). This suggests that the March decline is resuming.

Considering the positive correlation between oil prices and the S&P 500, last week’s bearish price activity in NYMEX crude is seen as a bearish factor for the US stock market this week.

Chart 3


In the 2 days since we posted this report to our Research Center, NYMEX crude oil has already declined by $3.12 per barrel or 3.4% while the bellwether S&P 500 has coincidentally declined by 26 points or 1.8%.

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