Investing
Haven
No Result
View All Result
Friday, January 22, 2021
  • Login
  • Premium Services & Login
  • 2021 Forecasts
  • Commodities & Gold
  • Stocks
  • Crypto
  • Mission 2026
Crypto investing >>
Investing
Haven
  • Premium Services & Login
  • 2021 Forecasts
  • Commodities & Gold
  • Stocks
  • Crypto
  • Mission 2026
No Result
View All Result
Investing Haven
No Result
View All Result
Home Reading markets

How Panic In Crude Oil Is Driving The Sell Off In Stocks. Where Will It Stop?

by Taki Tsaklanos
January 17, 2016
in Reading markets
0
2k
VIEWS
Share on FacebookShare on Twitter

Given the panic that ensued in stock markets over the last couple of weeks, analysts and commentators have a tendency to ‘explain’ why markets sell off. Crude oil is one of the many ‘reasons’ that are brought up. According to our analysis, however, crude oil is THE driver for sell off in stocks. The first chart below shows the correlation between panic in crude oil, and associated sell offs in stocks.

The lower pane of the first chart shows the rate of change of crude oil. We have drawn a red line which coincides with a 10% decline in a matter of 12 trading days. As clearly seen, each time crude is selling off to the level of at least 10% in 12 days, panic arises in stocks as well, as indicated with the red rectangles.

correlation_crude_vs_s&p_2014_January_2016

So the key question, in our view, is when crude oil will stop falling, as that is helpful in understanding when stocks will stop their decline. We revise 3 charts to that end.

First, the crude oil price chart shows a secular support area between 30 and 40 USD per barrel. Right now, crude is testing the bottom of that area. Will that hold, or is capitulation still in the cards? We believe capitulation is unfolding right now, so chances are high that the worst is over.

Crude_oil_1983_January_2016

Second, optimism index has fallen to the lowest level in 3 decades. Only two occurrences were similar, i.e. the ones in 1998 and 2002.

crude_oil_optimism_index_1992_January_2016

Third, crude’s deviation from its 90 week moving average has only been once as large is it today, i.e. during the depths of the 2009 crash, as seen on the second pane of the next chart.

crude_oil_90WMA_Futures_1998_January_2016

 

CONCLUSION:

We believe the worst is over when it comes to the decline in crude oil. As we are in a panic sell off, the decline can continue for a couple of days, and so can the decline in stocks. But we believe there is at least a medium term bottom being formed here.

  premium service trade alerts   premium service trade alerts   premium service crypto teaser  
Taki Tsaklanos

Taki Tsaklanos

Taki has +15 years of experience in global markets. His methodology is unique and effective, yet easy to understand; it is based on chart analysis combined with intermarket / fundamental / sentiment analysis. His work appeared on major financial outlets like FinancialSense, MarketWatch, ... Email: taki.tsaklanos@gmail.com. Twitter: twitter.com/investinghaven

  • Trending
  • Comments
  • Latest
silver prices

A Silver Price Forecast For 2021 *Silver 30 USD Underway*

January 2, 2021
gold price

A Gold Price Forecast For 2021 *Gold 2200 USD Underway*

January 2, 2021
dow jones

Dow Jones Long Term Chart on 20 Years *10 Must See Charts*

October 26, 2020
dow jones

A Dow Jones Forecast For 2021 *New All Time Highs*

January 2, 2021
bulls bears

S&P 500: Is This A Medium Term Topping Pattern?

0

Protected: [Emerging Markets/Gold/Silver] Heads up Template

0

Protected: [SPY] Heads up Template

0

Protected: [GOLD] Buy Alert Template

0
bulls bears

S&P 500: Is This A Medium Term Topping Pattern?

January 17, 2021
bitcoin

Bitcoin: Major Top Already Hit Or Parabolic Move Underway?

January 17, 2021
risk

Global Stock Leading Indicator: A Not So Promising Setup For February of 2021

January 17, 2021
us dollar

Dollar Ready To Create Havoc With Markets?

January 17, 2021

Connect with InvestingHaven

Receive top notch forecasts for free.

*We hate spam as you do.

Categories

  • Premium Services & Login
  • 2021 Forecasts
  • Commodities & Gold
  • Stocks
  • Crypto
  • Mission 2026

Site Navigation

  • RSS Feed
  • About us
  • Sitemap
  • Privacy & Disclaimer
  • Terms of Service
  • Contact Us
Investing
Haven

Top notch forecasting with gold price forecast, many stock predictions, cryptocurrency charts. Many investing tips and crypto market analysis.

Copyright © 2021 Investing Haven

No Result
View All Result
  • Premium Services & Login
  • Premium Investing Service
  • Premium Trading Service
  • Premium Crypto Service
  • 2021 Forecasts
  • Markets & Stocks
  • Commodities & Gold
  • Crypto Markets
  • Mission 2026

Copyright © 2021 Investing Haven

Login to your account below

Forgotten Password?

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In