The Most Important Chart - Oil vs S&P500

The first recorded nominal price for oil was $20 per barrel in September 1859.

From that point, it would decline by 99.5% to $0.10 per barrel by January of 1862.

Over the same period, a market cap weighted index of common stocks in the U.S. rose by 31%.

Thus oil came into this world in a bear market.

From that day forward, oil would remain in a “relative” bear market vs. an index of widely followed stocks as evidenced by oil divided by the S&P 500 (and its precursor).

However as the chart shows, oil trades price leadership every 12 years or so with the last major turn occurring close to 4 years ago on April 21st.

Note: The chart obviously excludes the negative oil print that occurred the day prior.