Gianni Di Poce just connected two dots that most traders are missing.
Crude oil and the VIX are tracking each other almost tick for tick on the 15 minute chart.
That correlation explains why rallies keep failing.
Gianni laid out the data clearly…
Rising energy prices create the worst forward return environment for stocks compared to falling inflation, rising rates, or falling rates.
As long as crude oil holds up, the VIX stays elevated and clean upside trends in equities remain elusive.
But here is where it gets interesting…
Gold and silver just got hammered this week, taking out their early February lows and erasing all gains back to late November.
Gianni has been calling for this correction all quarter.
The key question now is whether crude oil follows the same path lower. If it does, Gianni believes stocks will do very well.
Here is what Gianni flagged in tonight’s video:
- XLE hit a new all time high while the Nasdaq lagged, and energy dominance at the sector level is a headwind for sustained stock rallies.
- Semiconductors outperformed the S&P 500, the Nasdaq, and even the Russell 2000 today, which is a bright spot within the broader tech weakness.
- Bitcoin has been trending higher since its February 6 low, and Gianni sees that resilience as a positive signal for risk appetite.
- Magnolia Oil, a position Gianni entered in late January, continues to make new all time highs alongside his EQT holding.
- Dell is showing tremendous accumulation and approaching its May 2024 all time high, proving that opportunities still exist within large cap tech.
Gianni also addressed the private credit headlines spooking the market.
He compared the situation to the regional banking crisis in spring 2023, noting that the Fed stepped in then and would likely do so again.
Stocks had already bottomed five to six months before that crisis hit the headlines.
The bottom line is straightforward: Energy prices are the single biggest variable right now.
Watch whether crude oil follows precious metals lower.
If it does, Gianni expects the selling pressure in stocks to ease significantly.
