Ok. Let me try this: <i>Stocks are too strong for oil to go down</i> but <i>if oil goes down stocks will only get stronger</i>. Does this make sense (because there's no contradiction between what I said and what you said)? I explained the logic I used in this recent post:http://elitetrader.com/vb/showthread.php?s=&postid=1023794#post1023794
Oil controls stocks...stocks don't control oil... Oil and debt are macroeconomy commodities...as is housing. Stocks reflect the economy. The economy is detemined by those commodities and how "easy" it is to sustain or improve financial conditions within each individual's life.
It's true but the relation between stocks and oil is circular. Oil is strong when the economy is strong -- what happens to oil when the economy enters a recession for example?(it goes down) -- and when the economy grows at a rate that can't be sustained by the existing pool of resources, the prices of those resources increase to a level that eventually chokes the economy. Circular.
Actually, it's a reflexive process, so the USD affects commodities which effect interest rates which effect bonds which effect stocks, which at one point effects the Fed and the whole cycle starts again.
I could have used other expressions instead of "circular" such as "mutually influence each other" or "interact" but I wouldn't use reflexive. <b>Reflexivity</B> is a term most often encountered when reading George Soros who has a very different definition than the one you provided. In contrast to what happens in exact sciences, an economic situation under analysis will be influenced and often reinforced through market forces by the reaction of participants. There is no reflexivity between the law and gravity and a scientist's observations but there is reflexivity between economic growth and the enthousiasm of stock market investors.