A couple of weeks ago, I wrote an article about crude oil’s recent correlation to the S&P 500 (stock market) and that its initial move lower may be sending a bearish signal to stocks.
Since then, crude oil has fallen sharply through its up-trend line, sending a bearish message to Oil bulls.
Is the S&P 500 the next to fall?
Below is an updated chart of Crude Oil showing the multi-month downtrend (1), and the ultimate break down through its near term up-trend line (2).
More importantly, from a pattern perspective, Crude Oil is putting in a large weekly reversal bar (bearish).
This warrants watching as Crude Oil and the stock market remain highly correlated since their peak in October. Stay tuned!