It’s that time of year when traders can't avoid that 'sell-in-May' mantra, which typically applies to stocks. But could it also apply to crude oil this year?
The chart above looks at crude Vs. the S&P 500 over the past four years.
A year ago, oil and the S&P 500 both peaked on the first of May at (1) and then proceeded to create a series of lower highs and lower lows during the next 9 months.
To start off this year, both created reversal patterns (bullish wicks), forming double bottoms at the same time at (2).
Even though crude oil has rallied nearly 50% off its lows, it has just now retraced 23% of its declines off the 2014 highs and falling resistance at (3).
While crude and the S&P have been highly correlated these past few years, oil's behavior at (3) could become very important to the S&P 500 in near future.
I believe that what oil does at (3) could be pretty important when it come to portfolio construction going forward.
Both peaked in May a year ago and the question remains: will this year be any different?