Imagine reading all about Wall Street in comic book form. The superhero of the story would be the U.S. stock market. Who would be the bad guy? Well, if reporting by the financial press is any indication, the villainous Black Gold. The two characters stand at opposite extremes of light and dark, good and evil. If one is rising, the other must always be falling.
Like the diligent staff of Superman’s “Daily Planet,” the mainstream media gives regular accounts of the struggle between Oil and Stocks. Case in point: On Friday, August 29, the Dow Jones Industrial Average suffered a powerful triple-digit decline that erased the entire week’s gains. To the experts, a rise in OIL lurked guiltily in the background.
In their words:
- “US Stocks Weakened By Oil’s Rise.” (DJ MarketWatch)
- “US Stocks Shaken While Oil Stirs” (Forbes)
- “Wall Street falls as oil prices rose on hurricane fears in the U.S. Gulf. The weather map was as much the focus of stock traders as the Big Board.” (Wall Street Journal)
(Oil & Stocks: The Real Story. The September 2008 Elliott Wave Financial Forecast presents a side you won’t find anywhere else AND one you can’t afford to miss. Learn More Today)
Now, what if you discovered that this whole notion really was no more true than the average comic book? That high oil prices DO NOT necessarily hurt stocks, and that low oil prices DO NOT help them? Well, in the brand new September 2008 Elliott Wave Financial Forecast, that’s exactly what our analysts do -- via the stunning close-up below:
The conclusion of the chart is indisputable: “There is no consistent correlation between oil and stocks.” Prices in both markets rose together from October 2002 to October 2007, briefly parting ways until rejoining the downside in May 2008. From there, crude oil has dropped 14.4% and the Dow, 11%.
Consider this the first of many myth-debunking wake-up calls to come: There is no certainty that a continued slide in crude oil will jumpstart the U.S. economy into recovery mode.
The September 2008 Elliott Wave Financial Forecast offers a few more, equal in weight and import. Such as:
- Financial Bailouts do NOT guarantee that troubled banks won’t fail
- Low interest rates do NOT provide a tailwind for equities
- Gold is NOT a surefire “safe haven” during economic downturns
- Recession is NOT the worst-case scenario for the contracting economy, but rather something far more serious.
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