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Josh Brown: What Happens After Oil Gets Cut In Half?
FYI: Crude oil plunged 54% from its high last summer to its low this March and has now retraced about half of that loss. The equity strategists at Wells Fargo took a look at what typically happens to the stock market after oil gets cut in half and then stages a rebound like this. Regards, Ted http://thereformedbroker.com/2015/05/17/what-happens-after-oil-gets-cut-in-half/
Final quote from your linked article: "Moreover, energy stocks themselves are among the worst way to play a bounce back in oil, which is very counterintuitive. 12 months after a bottom in oil, we see a subsequent 70% rally but energy stocks have been down an average of 4.8% and energy company earnings are still down an enormous 30% over the same time frame."
Frank Holmes has collected some data on previous price drops in oil and compares these drops with oil's most recent price action.
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"Moreover, energy stocks themselves are among the worst way to play a bounce back in oil, which is very counterintuitive. 12 months after a bottom in oil, we see a subsequent 70% rally but energy stocks have been down an average of 4.8% and energy company earnings are still down an enormous 30% over the same time frame."
Frank Holmes has collected some data on previous price drops in oil and compares these drops with oil's most recent price action.
Here's a chart from linked article:
Crude déjà vu