Stocks Turn Higher as Oil Prices Fall Below $114-

[marine]

You silly man.

You're theory of "its a fact jack, when oil goes up, the market goes down. always. in the past 18 months." has been busted as a farce.

This is the comment I've been waiting for too.. because the nice man that wrote that blurb that you bolded.. well.. go back to the original article and reads his comments section below and well... hopefully you'll finally get it.

---------------

Higher oil means lower stocks, and vice-versa. Right?"

Oil prices and stock prices are uncorrelated (or very weakly negatively correlated) historically, and looking at your chart, they seem pretty uncorrelated on a day to day basis for this year as well.

Saying that prices are correlated on a daily basis is rather subjective. I wonder what you are looking at in that chart to say that they have been correlated this year? Wouldn't there need to be some flat spots to say anything reasonable? I don't think the periods you've highlighted even would qualify...

Post reply ? 6 days ago
+1Vote upVote down Paul Kedrosky ? 63p Of course they are uncorrelated over time. I was making fun of pundits who have been acting for weeks like every week on the markets hinges on oil, and so my tongue was very deeply in cheek, as I thought was fairly obvious.
To be plain, to the extent that you can argue that there were two brief periods this year when oil and the S&P 500 were somewhat in line this year, we're back to normal: No meaningful correlation. Post reply ? 6 days ago
This comment has 0 hidden replies. Show them! 0Vote upVote down John K Fair enough, I thought there was I thought there was a good chance that you were at least partly ironic. However, if you polled people, I'm sure well over 60% would believe that historically stocks/oil prices ARE highly correlated.

Even so, I'm still not sure that your chart shows anything meaningful even during the periods you highlighted.

Finally, I fully expect to see a NYT or other major newspaper article citing this blog post someday as proof that oil and stock prices ARE correlated: "As internet / VC pundit Paul Kedrosky wrote recenty: 'This year the major U.S. markets have been driven largely by what has happened in oil markets.'" Right?

 

[StevieD]

Marine, we will see is all I can say. Your chart shows 2 out of 3 periods where the market goes down and oil goes up. One out of the three the opposite happens. But we do not know why the opposite happened. Did the fed cut the rate? Did oil possibly not spike during that time. Don't forget my point was that when oil spikes. If it only goes up a few cents the market might actually look at that as some kind of relief. Anyway. It is much better discussing this than calling each other names. I will continue to track it day to day and see what happens.

 

[marine]

Marine, we will see is all I can say. Your chart shows 2 out of 3 periods where the market goes down and oil goes up. One out of the three the opposite happens. But we do not know why the opposite happened. Did the fed cut the rate? Did oil possibly not spike during that time. Don't forget my point was that when oil spikes. If it only goes up a few cents the market might actually look at that as some kind of relief. Anyway. It is much better discussing this than calling each other names. I will continue to track it day to day and see what happens.

ok,
so just so i am clear:

The market ALWAYS goes down when oil goes up has been changed to "just in the past 18 months"

The Market ALWAYS goes down when oil goes up, in the last 18 months.
Has been changed to
The market almost always goes down when oil severely spikes upwards in the past 18 months.

Clearly, you are on to some great theory here. I'm going to get a live feed of oil prices on my desktop here, and when i see that sucker start rising - I'm calling my broker and shorting the market with everything I own. Obvious I'll become a gajillionaire. Why has no one written a book on this system and hocked it on some infomercial late at night?

 

[marine]

This column was originally published on RealMoney on July 13 at 9:26 a.m. EDT.
Whenever I see the "Oil's up, so the market's down" headlines, I make it a point to see if that correlation has any factual basis.

Like many quick, intuitive explanations, it does not.

As you can see by the chart below, it's not that there's no correlation between the two. There is a correlation.

But at least in the past three-plus years the correlation has been positive, not negative.

I don't know that I'm particularly rooting for oil prices to keep going up, but so far, that rise seems to have little detrimental effect on the market.

 

[marine]

Financial journalists, for whatever reason, constantly report on correlated events (?Today, p occurred after news that q?) with sufficient ambiguity as to leave the reader with the impression that q caused p. As every freshman philosophy student learns (or used to learn, anyway), correlation does not imply causation.

Enough pontification, let?s play?

Oil prices rose sharply Friday on news that a ship under contract to the U.S. Defense Department fired warning shots at two Iranian boats.

Really? Did the Associated Press talk to traders at the NYMEX who were all, ?OMG warning shots, buy buy buy!!!? No. Isn?t it just as likely that after yesterday?s heavy selling in the energy sector, some mean reversion was due? Isn?t it also just as likely that oil rose in price for no discrete or knowable reason whatsoever?

The point here is that unless you?ve got a defensible causal chain to report on, it?s sloppy to be casting prepositions all over the place that leave readers with the impression that causality has occurred.

The story goes on to undermine its own headline with an account of how non-unique these saber-rattling sorts of events are. It follows up with the concession that:

On Friday, oil prices were already up before the report on news of a pipeline attack in Nigeria and a looming refinery strike in Scotland...

...and then continues anyway with commentary on one of the perennial bugbears of oil reporting, namely shenanigans in Nigeria.

Sadly, the story does not achieve oil cheerleading nirvana inasmuch as it fails to include a quote from T. Boone Pickens.

 

[djv]

It's true stocks go up/down for many reasons. Lately tho oil has played a big part. But housing/banking problems have to.
DTB your numbers are a little low from high point hit in mkt 2000. And Im not counting a 5000 nas. That was nuts. But you would think it could be 2200 by now.

 

[DOGS THAT BARK]

It's true stocks go up/down for many reasons. Lately tho oil has played a big part. But housing/banking problems have to.
DTB your numbers are a little low from high point hit in mkt 2000. And Im not counting a 5000 nas. That was nuts. But you would think it could be 2200 by now.

If I go picking high vs low I'd be doing the ole liberal media slight of hand trick.

Since thread was dated 8-11--thought the" fair and balanced" thing to do was take same date from each year.

Matt Not sure which dates of dow you want but you can retrieve any date here-

http://finance.yahoo.com/q/hp?s=^DJI

 

[StevieD]

ok,
so just so i am clear:

The market ALWAYS goes down when oil goes up has been changed to "just in the past 18 months"

The Market ALWAYS goes down when oil goes up, in the last 18 months.
Has been changed to
The market almost always goes down when oil severely spikes upwards in the past 18 months.

Clearly, you are on to some great theory here. I'm going to get a live feed of oil prices on my desktop here, and when i see that sucker start rising - I'm calling my broker and shorting the market with everything I own. Obvious I'll become a gajillionaire. Why has no one written a book on this system and hocked it on some infomercial late at night?

Marine,

I have stated time and time again from the beginning of the last thread that my statement only was meant for the last 18 months. So I have not changed the rules. I still stand by my assertion that when oil pops a buck or more the market goes down. I do give you credit for finding information that at least points out that on a day to day basis without anything else going on that oil can in fact go up a few cents and not have any affect on the market for that day. Don't make me sound like McCain and Obama constantly changing my position. I typed what I typed and you itook it one way. I have repeatedly tried to set the record straigt but you keep harping on the first message that has been corrected hundreds of times.

 

[marine]

You can cut and paste every American hating article you can find but you will never get over the fact that everytime oil goes up the market goes down. No matter what those Liars you like to quote tell you.

just sayin
:shrug:

 

[StevieD]

The evidence still does not support your blogger.:shrug: From Today.

Stocks Open Lower on Oil, Financial Sector Losses- AP
Stocks pulled back Tuesday as oil prices rebounded and losses from JPMorgan Chase & Co. raised more concerns about the financial sector