Aug. 21 at 7:55 PM
U.S. crude oil and gold are flashing signals for equity bulls, says SentimenTrader. Analyst Jay Kaeppel notes that the WTI/gold ratio—the price of a barrel of crude divided by an ounce of gold—has been a reliable market indicator.
WTI October futures (CLV25 +1.24%, CL.1 +0.44%) settled at
$62.71, while December gold (GCZ25 -0.14%, GC00 -0.14%) closed at
$3,388.50, putting the ratio at 0.0185, a historically low level. Cheap energy relative to gold has historically supported equities, with the S&P 500 (SPX -0.28%) often posting >20% gains a year later when the ratio falls below 0.037.
Gold has outperformed WTI by 39.6% YTD, its strongest lead in five years, while crude heads for its steepest annual drop since 2020. The S&P 500 is +8.7% YTD.
Kaeppel concludes: markets perform best when energy is cheap. “It is low now, which bodes well for stocks.”
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