Comparing the monthly chart of oil and SPX from the bear market context, i would classify it in 4 categories.
1st Category:
DISCONNECTEDNESS/INVERSE RELATION: (2 occurrences)
When oil peaked out on 3 Sept 1990, SPX actually made a bottom. the same happen on Nov 1996. There are the two period when inversely proportional relationship happened.
P.S. I do not care about the fundamental reason for this to happen, its purely on deciphering an observation from the chart.
2nd Category:
OIL LEAD THE COLLAPSE WITH LOWER HIGH (1 occurrence)
This only happened once when oil price made a lower high on Oct 1986 leading the SPX crashed while SPX was still making higher high.
3rd Category:
SPX LED THE COLLAPSE WITH LOWER HIGH (2 occurrences)
On Nov 2000 & May 2008, SPX made a lower low while oil was still making higher high. Subsequently oil prices collapsed due to divergence
4th Category:
COLLAPSED IN TANDEM (2 occurrences)
Feb 2010 & Mar 2011, both SPX & Oil plunged together on monthly chart.
Latest situation:
Oil has made a lower low and collapsed while SPX is still making record high, would this situation resolve into inverse relationship where SPX keep going higher (1st Category)
or the divergence will take its toll on SPX and pull it down? (2nd Category)
It remains to be seen...
1st Category:
DISCONNECTEDNESS/INVERSE RELATION: (2 occurrences)
When oil peaked out on 3 Sept 1990, SPX actually made a bottom. the same happen on Nov 1996. There are the two period when inversely proportional relationship happened.
P.S. I do not care about the fundamental reason for this to happen, its purely on deciphering an observation from the chart.
2nd Category:
OIL LEAD THE COLLAPSE WITH LOWER HIGH (1 occurrence)
This only happened once when oil price made a lower high on Oct 1986 leading the SPX crashed while SPX was still making higher high.
3rd Category:
SPX LED THE COLLAPSE WITH LOWER HIGH (2 occurrences)
On Nov 2000 & May 2008, SPX made a lower low while oil was still making higher high. Subsequently oil prices collapsed due to divergence
4th Category:
COLLAPSED IN TANDEM (2 occurrences)
Feb 2010 & Mar 2011, both SPX & Oil plunged together on monthly chart.
Latest situation:
Oil has made a lower low and collapsed while SPX is still making record high, would this situation resolve into inverse relationship where SPX keep going higher (1st Category)
or the divergence will take its toll on SPX and pull it down? (2nd Category)
It remains to be seen...
