The 4-month rally has been broad-based, with other risk-on assets like crude oil rallying in stride.
This isn’t a surprise, as crude oil will often perform in line when the economy is on track.
Currently, the correlation between stocks and crude oil remains up.
But if crude doesn’t get its act together, it may become a headwind for stocks. See the chart below for more color.
Last week, Crude Oil created a large bearish reversal pattern while testing its 61.8% Fibonacci level at (1).
In my humble opinion, stocks would receive a short-term negative message if crude oil turns weak here. Stay tuned!