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Does it seem odd that a rally in Crude oil could be good for the economy? Would a rally in Crude Oil at this point cause the S&P 500 to push higher in price?

Crude Oil and the S&P 500 have a fairly high correlation the past few years (see my 500/Crude Oil correlation).

The Oil Stock Index (XOI) and Crude Oil (Crude Futures) find themselves on support lines right now that have coincided with market lows in 2010 and 2011.

 

 

Odds are pretty high that lower gas prices at the pump are easier on the pocket book! At the same time one cannot overlook that lower crude prices can seem to go along with a weaker economy.... If history is a guide, in the short run, the S&P 500 could benefit from a rally in Crude oil prices.

 

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