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Oil Attempting To Stabilise Relative To S&P 500

ByMike Macdonald
Published 02/01/2015, 03:25 AM
Updated 07/09/2023, 06:31 AM

Crude Oil has been a significant underperformer relative to the S&P 500 since at least May 2012. However, there are early signs of a corrective bounce developing, as the very oversold weekly RSI unwinds, and prices tick higher towards the 8-week weighted MA. There is potential, in the coming weeks, of a break above here, with investor sentiment then expected to improve, leading to a more bullish tone in Oil. Money managers are thus advised to monitor prices closely, and be prepared to adjust exposure accordingly.

Money managers can maintain a short Oil/long US Equities allocation, but be prepared for a corrective bounce in the coming weeks.

Weekly Chart Since May 2012.png

Latest comments

what about short possition for tommorow
That's always a tough question to answer, since it depends on current asset allocation, risk parameters and client profiles.. . My catch-all answer would be to position for a further rally in Oil, and a fresh drop in the S&P500 in the coming weeks. This likely suggests a more neutral asset allocation, or even, if investors have a high-risk appetite, a long oil/short S&P stance.. . But once again, the answer is a function of individual risk parameters.
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