Amazing the difference 5 minutes makes. Look at these charts versus the ones from my last post. Wow! These are the kinds of movements that traders love.
The Connection to Crude and Relationships Between Futures
Meanwhile, and it is no coincidence, the price of crude oil, after briefly trading below $140/barrel today, has begun to rise again. Stocks and crude oil have also traded inversely to each other in recent weeks. This correlation has been so strong that a trader can literally watch crude oil rise on one chart while stocks are declining simultaneously on a parallel chart. As long as the price of crude oil remains at such elevated levels, I find it hard to imagine a scenario in which stock markets can prosper.
Lest anyone make the mistake of assuming that these relationships are permanent, I would warn others against making that assumption. These relationships between futures markets are as fluid and changing as the markets themselves. Still, the striking relationships between these three futures (stocks, treasuries, oil) are hard to miss (see the three charts below). These movements not only occurred inversely to each other, but they also occurred simultaneously.
Fortunately, although tropical storm Bertha has now strengthened into a full Hurricane, its storm path indicates that it will not make landfall in the United States, so there is no risk of impact on the price of crude oil. This, along with the stronger Dollar, are the primary reasons for the falling price of crude oil today. However, with four more months in the hurricane season, what will happen to the price of crude oil -- and thus, stock prices -- if/when a hurricane develops that does threaten oil supplies in the Gulf of Mexico? We should all shudder at the thought!
Crude Oil
Lest anyone make the mistake of assuming that these relationships are permanent, I would warn others against making that assumption. These relationships between futures markets are as fluid and changing as the markets themselves. Still, the striking relationships between these three futures (stocks, treasuries, oil) are hard to miss (see the three charts below). These movements not only occurred inversely to each other, but they also occurred simultaneously.
Fortunately, although tropical storm Bertha has now strengthened into a full Hurricane, its storm path indicates that it will not make landfall in the United States, so there is no risk of impact on the price of crude oil. This, along with the stronger Dollar, are the primary reasons for the falling price of crude oil today. However, with four more months in the hurricane season, what will happen to the price of crude oil -- and thus, stock prices -- if/when a hurricane develops that does threaten oil supplies in the Gulf of Mexico? We should all shudder at the thought!
Crude Oil
Stocks
Treasuries
