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.