MrGimp

No one has any opinion on this? Perhaps a shorter time frame would better illustrate the correlation... Why is there such a strong link between oil and financials?

So I noticed that Oil has been inverse of the financial sector. Its not entirely a 1 to 1 ratio...but thats rare with stocks anyways. But the correlation is still entirely visible. Now, Commodities (I had thought) were pretty much supposed to be inverse the dollar. That is the explanation for oils boom at least...that as the dollar fell OPEC had to charge more per barrel to make the same profit. BUT...look at the chart of the USO vs the dollar index. The blue line is the USO, the black line is the dollar index. Now look at the USO in comparison to the financial sector... (green is the financials) Why is there such a strong link between the financials and oil? And would this indicate that the current market downturn has been caused more by the rising price of oil rather than subprime losses and CDO credit default swaps? And does the increasing price of oil indicate FURTHER losses among the financials and the DOW?

Yeah I agree Habi, you make a good point about reading the candles differently depending on the trend youre in. Although, Im no day trader. Not long term either though. I guess Id be labelled a swing trader? Although sometimes I feel like Im trading flat lines. lol But Im getting better, especially the last couple weeks, I feel like something has clicked with my understanding of what Im doing.

Well if its an inverse of the dollar, Id have to say gold will go higher. All these rate cuts are going to increase inflation and further weaken the dollar. Besides, our economy has a weak dollar policy for at least as long as Bush is in office. I think this sell off is investors cashing in on profits in the commodity sector, combined with people who want to believe Bear Stearns marks the turn around in the market and the dollar.