Wednesday, 30 December 2015

Stocks rebound on oil, sharp gains possible ahead

After mostly falling on Monday, stock markets rebounded on Tuesday.

In particular, the S&P 500 jumped 1.1 percent, helped by a 2.9 percent surge in US crude oil.

“Most of the gains on Wall Street are linked to oil price moves and it looks likely that the trend of tight correlation between stocks and oil will continue in early 2016,” said Randy Frederick, managing director of trading and derivatives at Schwab Center for Financial Research.

That correlation could turn out to be a positive for stocks in 2016.

According to Chris Kimble, historically, crude oil tends to trade sharply positive after a big plunge. “I really think, looking at 30-year and 40-year charts, that commodities are at an important threshold,” he told MarketWatch.

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