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By Mike Paulenoff, www.MPTrader.com
Our big picture view of the S&P 500 compared (or contrasted) to the price action of crude oil concludes that we need to get long the UltraShort S&P 500 ProShares ETF (AMEX: SDS), or short the SPY, at some point in the hours directly ahead. If the weakness in the S&P 500 between 2000 and 2002 represented a "natural" correction within the roaring multi-year bull market, rather than a reflection of deteriorating fundamentals (oil prices were well-behaved and in fact declined from $38 to $17bbl), then perhaps the post-October 2007 weakness in the SPX does reflect both a "natural" correction of the prior 5-year advance and a developing and progressing deterioration of the fundamentals (oil prices have climbed from $85 to $140/bbl).
Mike Paulenoff is author of www.MPTrader.com, a real-time diary of his technical analysis & trade alerts on ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international markets, plus key ETF component stocks in sectors like technology, mining, and banking. Sign up for a Free 15-day Trial!
