In a recent MarketWatch article, SentimenTrader's senior analyst Jay Kaeppel highlighted that the relationship between crude oil and gold may be sending a bullish message for stocks.
According to Jay Kaeppel, the crude oil versus gold ratio - which measures the price of a barrel of WTI oil relative to an ounce of gold - has historically been a reliable barometer for equities. When the ratio falls to very low levels, such as 0.037 or below, the S&P 500 has typically delivered strong results, with median one-year gains exceeding 20%. By contrast, when the ratio spiked to unusually high levels, such as in 2000 and 2008, stock market outcomes were poor.
MarketWatch also noted that the most recent low-ratio signal appeared in April 2025, and since then, equities have already achieved the average return seen in past winning cases. With the ratio still at the low end of its historical range, the setup suggests stocks could continue to advance.
While no indicator is perfect, Kaeppel emphasized that abundant, affordable energy has often provided a favorable backdrop for equities. "The stock market performs best when it anticipates economic strength," he said, adding that the current ratio continues to argue for optimism.
To access Jay Kaeppel's full research note and other market insights, visit sentimentrader.com