Our big picture view of the S&P 500 compared (or contrasted) to the price action of crude oil concludes that we need to get long the UltraShort S&P 500 ProShares ETF (AMEX: SDS), or short the SPY, at some point in the hours directly ahead.

If the weakness in the S&P 500 between 2000 and 2002 represented a "natural" correction within the roaring multi-year bull market, rather than a reflection of deteriorating fundamentals (oil prices were well-behaved and in fact declined from $38 to $17bbl), then perhaps the post-October 2007 weakness in the SPX does reflect both a "natural" correction of the prior 5-year advance and a developing and progressing deterioration of the fundamentals (oil prices have climbed from $85 to $140/bbl).

By Mike Paulenoff

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com) , a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of Exchange Traded Funds (ETFs) that track equity indices, metals, energy commodities, currencies, Treasuries, and other markets. It is for traders with a 3-30 day time horizon, who use the service for guidance on both specific trades as well as general market direction

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