Oil and Stock Market Correlation- Elliott WaveNov 16, 2021

“When you really believe that trading is simply a probability game, concepts like right or wrong or win or lose no longer have the same significance.”

Mark Douglas, Trading in the Zone

Stocks and Oil – A tight correlation: Near-term correction lower?

We are looking for the possibility of a deeper near-term correction lower in both stocks and oil prices.  It has been a tight positive correlation between the S&P 500 Index and Crude oil prices lately. 

But supply seems to be catching up with demand in the oil market:

Source: IEA

…and to say traders seem both too bullish and complacent suggests Mr. Market needs to do some work on the downside.

The volatility index continues to push lower suggesting a lot of complacency:

But, maybe with the continued flow of money, it is right to be bullish. 

The central banks have been tightening, a bit, but not relative to the expected inflation threat.  Additionally, many bullish players are expecting a “melt up” precisely because of inflation, believing stocks are a good inflation hedge.  All of this is very plausible, and our wave view suggests in time we will see higher highs in both stocks and oil prices. 

But, over the next couple of weeks, our wave analysis is telling us we could see lower prices in both oil and stocks and it may be a good opportunity for shorter-term players. 

Below is our current wave view on both S&P 500 Index and Oil:

S&P 500 Index:  We are looking for ongoin impulse, currently with price seen in wave 3) so more upside wave 4) setback.

Crude Oil: Given the correlation between stocks and oil, and the recent less-than bullish news of supply/demand conditions, we are favoring more upside after fourth wave dip.

If you like what you see here, you can learn more about us, and subscribe to our service at our website.  We also have live customer chat support to serve you.


Gregor and Team…

If you like what you see here, and would like our Macro Views sent directly to your mailbox, free, just click on link below and register.

Register for EW-Forecast Macro Views

Interested in cryptos too? Check our view on Bitcoin. CLICK HERE


Any reviews, news, analysis, prices or other information contained on our website is provided as general market commentary and delivered electronically through a distribution channel to larger number of clients, therefore does not constitute investment advice or investment research. We are not trading advisors. Most of our work is for educational purposes only, with information based on Elliott Wave theory in real time. Trading forex, futures, options, stocks, cryptocurrenices or any another trading market carries a high level of risk, and may not be suitable for all investors.

The possibility exists that you could lose some or all of your initial investment; therefore you should not invest money that you cannot afford to lose. Our website and the information that we provide should not be relied upon as a substitute for extensive independent research before making your investment decisions. In no event will we be liable for any loss or damage on your account in connection with, the use of our products. For any real cash investments you have to contact your financial advisor.

Any information or material contained on our website is owned by Val Global d.o.o.. Reproduction is prohibited without Val Global d.o.o. prior license in writing.

By continuing to use the site, you agree to the use of cookies. Learn more.

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.