Hey, Ross here:
Everyone’s watching oil prices – and who can blame them?
Yesterday, I talked about how oil volatility will likely keep translating into stock volatility – even if the Iran conflict abates.
Today, I want to look at the oil-stocks relationship from a different angle.
Two different angles in fact. Let’s start with the first chart.
Chart of the Day
This chart shows the short-term (10 days) correlation between crude oil futures and the S&P 500.
As you can see from the chart, there’s no “fixed” direction between short-term stock movements and crude oil futures.
Sometimes oil and stocks move in tandem – other times they move in opposite directions.
There’s seemingly no rhyme or reason to it.
In fact, just a few weeks ago, both oil and stocks were heavily positively correlated…
But right now, they’re heavily negatively correlated.
Understandably, this is throwing traders for a spin.
Now, take a look at this chart.
This shows the annual return and win ratio for the S&P 500 depending on whether oil is up or down.
And as you can see, whether oil is up or down – the difference in the longer term for the S&P 500 is nearly negligible.
In other words, there is a huge disparity in the relationship between oil and stocks depending on the time frame you’re looking at.
In the short-term, it can be highly impactful.
In the long-term, it can be almost negligible.
I explain why this matters to your trading below.
Insight of the Day
The difference between short and long-term performance in stocks is an advantage we can use.
There are stocks right now in my portfolio that I wouldn’t dare to hold long term. Not a chance.
I would never put these stocks in my retirement accounts (which are largely composed of ETFs).
But in my trading account? That’s a completely different story.
There are numerous “bad” stocks in my trading account right now that I’m very happy to hold…
Because I know that I’ll be exiting them soon – likely with double to triple-digit gains.
Do I care about the “long term potential” of these stocks? Not in the least.
The only thing that matters to me when it comes to these stocks is their short-term potential.
I’m going to reveal something on targeting these explosive “short-term stocks” tomorrow…
So keep a look out for that.
In the meantime, if you want to see where I’m personally allocating my own long-term retirement account right now…
Then click here to watch me break down my 2026 retirement portfolio now.
Customer Story of the Day
“Ross and all the different services the Traders Agency offer are the best thing one can do if they would like education and trading tips, help and alerts on a daily basis.
Regardless of the level of trader that you are, they have you covered.
Services are there for multiple different styles of traders.
Also Ross shares his experience and analysis when it comes to longer term investing as well when he broadcasts live for his members but every time he is asked the question on any other occasion as well.
His teaching style is outstanding and very very easy to understand and remember. I am very grateful to have found them and have recommended them to multiple friends too.
Lots of people love them for the Insider trade alerts and analysis Ross sends out regularly and are exciting news for one’s portfolio but I personally would recommend every single service of the agency as evenly valuable assuming it fits one’s style of trading.
All the best always and forever to Ross and crew.”
Ross Givens
Editor, Stock Surge Daily
