The Nasdaq (QQQ) and S&P 500 (SPY) printed another week of fresh all-time highs.
Semiconductors keep stealing the show, which won’t surprise anyone following the Sector Leader Bullseye.
Market internals look healthy. Surface action looks healthy.
One asset class keeps me cautious before I fall asleep at night.
The culprit is crude oil.
This note lays out why crude is the single biggest wildcard for stocks right now. You’ll see when I expect it to roll over and how I’m positioned while that plays out.
Get this variable right, and you’ll understand why the bull trend holds into the back half of the year.
You’ll also see the window where the real volatility setups appear later on.
Why Oil Is the Real Risk
As long as crude is not breaking down, stocks stay vulnerable to sudden bursts in volatility. That dynamic played out multiple times last week.
Oil is the asset class most susceptible to geopolitical turbulence. Every headline risk runs through the barrel first, and equities feel the aftershock within hours.
I covered this setup in the Trinity quarterly forecast session on March 30. That session landed exactly one day before the market bottomed.
The call was straightforward. Crude oil was due for a top while stocks were due for a low.
Stocks hit their reset button and never looked back. The tailwinds remain strong enough to keep pushing new all-time highs.
Now it’s oil’s turn to find a low, and that low could arrive at any time.
April 17 may have marked the turn in crude. I’m not fully convinced yet.
If April 17 was the low, expect wide daily trading ranges in stocks to continue as the two asset classes pull against each other.
The Bear Trap That Keeps Repeating
Every downtick in equities gets the bears excited right now. Those downticks often align with a spike in crude oil, and bears read it as confirmation that the top is finally in.
The observation that oil acts as a drag on stocks is genuinely accurate. That piece of their thesis is correct.
Then everyone piles into the shorts. Oil cools down, stocks squeeze higher, and the cycle repeats. Wash, rinse, repeat has become the theme.
Perma-bears have been running this exact play for months, and the cost shows up clearly in their track records. Positions matter more than opinions, and the market has been rewarding long positioning while bearish commentary dominates financial media.
The cleanest path forward for stocks involves oil taking another sharp leg lower. Specifically, I’m watching for:
A move down to the 75.00 to 80.00 area on crude
A final low sometime in May
Confirmation that the geopolitical risk premium is bleeding out of the tape
If oil delivers that move, it actually sets the stage for volatility to return to stocks come late summer. Trends need to shake out weak hands at some point, and an oil-driven flush during the summer months would do exactly that.
The tape would get its overdue reset. The next leg of the bull trend would have fresh fuel to build from.
The Trinity Terminal continues picking up setups consistent with this view. Semiconductor leadership remains intact, and the market’s internals continue to support the primary uptrend.
How to Position Right Now
Until oil breaks lower, keep riding the bullish wave in stocks. The trend is your friend, and the latest all-time highs confirm the primary bull trend.
Getting cute with tops is a losing strategy. The perma-bears have been doing it for months, and the cost shows up clearly in their numbers.
Pullbacks and drawdowns inside a confirmed bull trend are normal and healthy. Shallow corrections inside primary uptrends tend to resolve higher far more often than not. Flipping the entire game plan over every dip is how accounts get ground down over time.
My approach remains the same. Stay long the trend and let the bull wave run until oil gives clear signals it’s rolling over.
When crude finally rolls over, expect the squeeze in stocks to extend further. When crude bottoms, start planning for the late-summer volatility window.
That’s the real opportunity brewing beneath the surface of this market.
The roadmap is straightforward. Let the trend do its work now and prepare for turbulence later.
Watch the $75 $80 zone on crude oil in the weeks ahead. That level is where this entire thesis confirms or needs a rethink.
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