[BostonCard]

Whatever the correlation between DJI and energy prices was, that all went to hell, with oil dropping to under $20 a barrel and the Dow dropping 20% from its peak.



BC

I think dropping oil prices actually correlate directly, since some energy companies are part of the DJ  base.

I suspect a lot of that correlation has to do with the 70's where spikes in oil pries due to the Arab embargos led to problems with the stock market.  But my inclination was like your that in economic expansions, demand for energy would increase and thus raise the price of oil.  But the OP wrote, "What it showed, clear as day, is that the DJI correlates with energy prices (inverse correlation, the lower the energy prices, the higher the index) and corporate profits. Nothing else came even close to the power of these two variables."

BC

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Seems like the initial dramatic drop was based on fear of near total collapse, and not knowing just how bad it was going to get.  As things seem to have stabilized, "the market" (and I realize I'm anthropomorphising it) probably has probably said to itself "could have been worse".

BC

[BostonCard]

Whatever the correlation between DJI and energy prices was, that all went to hell, with oil dropping to under $20 a barrel and the Dow dropping 20% from its peak.



BC

I think dropping oil prices actually correlate directly, since some energy companies are part of the DJ  base.

I suspect a lot of that correlation has to do with the 70's where spikes in oil pries due to the Arab embargos led to problems with the stock market.  But my inclination was like your that in economic expansions, demand for energy would increase and thus raise the price of oil.  But the OP wrote, "What it showed, clear as day, is that the DJI correlates with energy prices (inverse correlation, the lower the energy prices, the higher the index) and corporate profits. Nothing else came even close to the power of these two variables."

BC

---

Seems like the initial dramatic drop was based on fear of near total collapse, and not knowing just how bad it was going to get.  As things seem to have stabilized, "the market" (and I realize I'm anthropomorphising it) probably has probably said to itself "could have been worse".

BC