Tom McClellan has developed a long-term (100 years!) tried-and-true association between the price of crude oil and the Dow Jones Industrial Average. The movement between the two prices is not simultaneous but, rather, with a ten-year delay, that is, the movement in the price of crude oil is mirrored by the movement in the DJIA ten years later. Look at this correlation in the chart below which shows the ten-year price of crude oil (black line) that occurred beginning in 1988 set forward ten years, i.e., begins on the chart in 1998, and the value of the DJIA (blue line) for the ten years from 1998.
This ten-year lag correlation has been occurring continuously over the last 100 years, as clearly identified in the next chart.
No-one knows just why this ten-year mirror has been so conclusive for so long, but just the fact that it has occurred over such an extensive period provides sufficient justification for its acceptance.
Since crude oil prices reached an interim peak in April 2011, this implies the DJIA will top out around April 2021.
The next big down-draft in crude oil prices was in 2014. This is shown in both the charts but remember that the black line oil prices are advanced ten years. So, if history repeats, there could be another big drop in the DJIA in 2024.
You can access the entire McClellan report on the Oil/DJIA association by clicking HERE
