What's Weighing on Oil? w/ Tony Greer

0:00If you've been considering futures trading, now might be the time to take a closer look. The futures market has seen increased activity recently, and Plus 500 Futures offers a straightforward entry point. The platform provides access to major instruments, including the S &P 500, NASDAQ, Bitcoin, natural gas, and other key markets across equity indices, energy, metals, forex, and crypto. Their interface is designed for accessibility. You can monitor and execute trades from your phone with a$100 minimum deposit. Once your account is open, potential trades can be executed in two clicks. For those who prefer to practice first, Plus500 offers an unlimited demo account with full charting and analytical tools.

0:45No risk involves while you familiarize yourself with the platform. The company has been operating in the trading space for over 20 years. Download the Plus500 app. Trading in futures involves the risk of loss. It is not suitable for everyone. Not all applicants will qualify. Hey, everyone. If you like this podcast, go behind the paywall to get privileged access to the smartest minds in finance. Visit realvision.com slash RVpod and use the promo code podcast10. That's podcast10 to get 10 % off our essential membership for the first year. Join the Real Vision community and learn how to become a better investor.

1:24And now to the top analysis of today's markets.

1:35What's weighing on oil? Hi, everyone. Welcome to the Real Vision Daily Briefing. With me today is Tony Greer, editor of the Morning Navigator newsletter. Hi, Tony. How are you today, Maggie? I'm doing okay for Monday. Can't complain. But we have a lot going on, actually, this Monday. Might be the only busy day of the week. I'm not sure. But we, of course, had Saudi Arabia surprising investors over the weekend by going it alone and cutting production without the rest of the OPEC Plus members. S &P rallied, was in rally mode again today, hitting nine-month highs before giving up some of those gains, although it was kind of trying to come back at the end.

2:07I think the NASDAQ managed to peek into positive territory. And then we had Apple releasing a really expensive headset, so stuff going on in the tech world as well. So what's on your radar? What are you looking at to start the week off? Yeah, I'm trying to keep track of all of that and more for sure, Maggie. You know, basically what I'm looking at is I see the S &P breaking out and I see the VIX breaking down, which is a little bit of an easy pass story for the bulls in the short term. You know, when we have the VIX breaking a range like this, it's kind of indicative that everyone that bought insurance for, you know, a sell off is probably, you know, pitching their volatility into this abyss here.

2:50it's probably going to be a situation that probably lasts you know for it looks like you know something that i'm comfortable with saying that it's going to be lasting for a good you know several days to two weeks where we're going to have volatility under pressure stocks breaking out on the upside the s &p slowly probably carving a high you know a new high for the year up to 4400 or so um you know i'm looking like that's the way the s &p is looking and then we've got the Nvidia story, right? We've got the artificial intelligence story. We've got Nvidia just had the huge breakout two weeks ago on the earnings.

3:24We know that it's trading 30 times sales, which is, you know, as much as I don't trade valuations, I know that sounds absurd. We've seen massive funds. We saw eight and a half billion dollars fly into inspo technology for the week ending May 31st as of, according to B of A strategist, Mike Hartnett, he's calling it a little baby bubble, which are the kind of things that we like to trade you know we correctly identified the icarus print real time as luck would have it on may 30th in nvidia and the icarus print is when you know the stock is up 25 flying too close to the sun and suddenly its wings melt and it backs off a little bit so i feel like that's the phase that we're in right now with technology um you You know, that semiconductor NVIDIA headline may have sort of carved the interim high.

4:14And so I feel like those names can pull back a bit. And I feel like there are other sectors in the S &P that still look like they're in good shape, like gold miners and home builders and things like that. So I'm really wrestling right now with the VIX, the curve and the S &P breakout most directly. Fantastic. So that's a really interesting point, because as you mentioned up until this point, and And this has bothered a lot of people that the rally has been so narrow, really concentrated in really the chip names. But let's give it the AI umbrella with Microsoft in there as well. And I know at some point you were like, listen, I'm not going to stand in front of this thing.

4:51I mean, it was just so powerful. Do you see some rotation now? Well, you know, I feel like we've at least gotten to the point where you can draw a circle around all of the late longs that piled in with large positions on the headline. It had all the trappings of analysts raising their price targets right through the market to prices that have never traded in NVIDIA. You know, those heavy volume gapping days are, you know, very indicative of, you know, the money is going to work. right so if there becomes a story or a sort of uh you know market nuance where maybe rates are going higher and it's not as beneficial to own tech then there's certainly a chance where i may pursue a trade on the downside where maybe the you know s &p or maybe the queues and tech comes back in line with some of the other sectors of the market you know that's what's still what we're seeing on a year-to-date basis maggie is big tech is running away ethereum is rallying then you've got semiconductors the whole ai story and on the downside of for the year once again you've got you know oil names um basically really everything energy a couple of metals in mining sector so you know um that's the way the bifurcation on the year is going i'm not sure that it's just going to continue in a runaway train in that direction though i feel like that can flatten out where maybe we see tech come back to earth and it looks like there's some you can make a case that energy is a little bit oversold and has some upside catalysts to it as well.

6:23So we'll see what happens with that in the next couple of weeks. Yeah, that's amazing. I actually want to dig into energy and some of the commodities, both from an equity and from the actual commodity perspective in a second. But since you were talking about AI and tech, so you might have noticed, all of you, we ran a little thing at the beginning of the show. We have a huge festival of learning coming off, kicking off today because of this huge explosion because of what we've seen, not only happening in the market, but we have people asking us, you're all asking us in the chat, like, what does this mean?

6:55What should I tell my kid who's going to college? I mean, it's sort of hitting us everywhere. So Festival of Learning, some of the content's going to look at big picture issues, policies, ethical, where's the opportunity, what happens when quantum computing meets AI. That was a specific question last Friday, and I I told them we'd make sure we cover that. We're going to have a whole conversation. I am tomorrow live with Mike Green and Nardo, who's an expert in quantum computing. Today, we kicked off with Peter Diamandis. You know him. He's the founder of the XPRIZE. And Salim Ismail, they co-authored a book called Exponential Companies.

7:34Let's have a little listen to that clip, and then we'll catch up on the other side. Yeah, you know, it's AI, along with multiple other technologies like blockchain and so on, have been moving along somewhat deceptively. We've been tracking LLMs for a few years now. And now that they're in the public eye, it's clear as Peter talks about this. He says, you know, in the next few years, either you're heavily embedding AI into everything you do or you're not going to be around. And so therefore all products and services now will be enabled and augmented using AI and algorithms going forward. And you have to take that into account, either to be competitive or to leverage new opportunities or to enter new markets.

8:13I'm laughing. I'm looking in the chat as that's running. And Mike White says, I think I've been possessed by AI. Won't leave me alone. I feel like we all feel like that, Mike, which is why we're doing this. Things are moving so fast. It's interesting that Peter and Ismail, who you saw there, are not even publishing Salim Ismail. They're not even publishing the book traditionally. It's going to live live online so they can make constant updates. That's how fast things are moving. You can access that whole conversation on our platform and receive an invite to a really cool workshop they're doing.

8:43If you're not an RV member, you can sign up for the festival with a link that Brian will drop. We're going to show it again at the end. You just have to register. It's for free. And in addition to those big picture themes, we're going to drill down and have some tutorials, talk to community members about how they're using it to grow businesses. Super cool stuff. So I hope you can join us for that. But Tony, how do you think about, so this AI narrative has been so powerful and people have gotten sort of run over who've tried to short this or say, oh, things look overvalued. How do you deal with that kind of like narrative that's everywhere every time you turn on the television or talk to anybody and then the price action?

9:22How do you do that? It's fun. It's a lot of fun. You know, this is equities becoming religion, right? And we've seen it before. This is price agnostic. I have to be involved. You only live once type of trading. You know, it's this is the volatility that you want for a trader sitting in my position. It certainly shakes up the apple cart quite a bit. you know when you've got a sector that's just taking off and driving on a narrative like this it gets oversold and stays oversold for a really long time because that positive reinforcement loop in the media and the markets generally feeds on itself so you know early on it's something that that you know you were able to get into and really play from the long side if you bought the first print for example if you bought the first print in semiconductors or queues you know that was tradable.

10:16You can make money on that on the upside. Not a greater fool trade at all. You know, still serious money piling in and trying to position the way they want in that sector, according to what the sell side has just lined up on their matrices for price targets and earnings, et cetera, et cetera. So it's great to see the volatility take place. You watch the mania happen. You know, you look for signs of distress and then you look for signs of exhaustion, You know, and this is without question a trade now that we can observably see all the length that's in it and at what price the length is in it at.

10:52This is definitely going to be a trade for me to hunt on the downside. Right. The retracement trade when the Q's and NVIDIA fall back to earth. You know, NVIDIA can fall 25 percent to three hundred dollars and still be in a raging uptrend. And it wouldn't shock me for something like that to happen for the health of the AI move. right if nvidia if this move is really going to be real what's going to happen is it's going to back off to 300 hold that level somewhere close the gap and go so you know you kind of look for these historic plays or historic ways for the stocks to play out and you see where you can jump in you know see where you can jump in in the middle so for me there's you know i'm kind of looking now that the vix has broken that range on the downside and tech stocks are floating away and the S &P is floating away above 4 ,200, I'm definitely looking for the VIX to wear everybody out on the downside and then have an exhaustion print where maybe the VIX prints a new low and there's a red to green day and stocks go the opposite way, right?

11:56Maybe stocks carve a new high and on another incremental headline and that's where you can say, wow, this just went from oversold to really oversold and at higher prices. So now you can, you know, as a trader, you can say, you know, maybe I'll stick my toe in the water here at some point. So I'm definitely looking to fade this technology move for a trade, you know, back into trend line support type of thing. I'm definitely looking for natural resources, which have gotten oversold to bounce, although I haven't traded a share of it yet. But I had a great conversation with Tom Thornton for my subscribers on my platform.

12:34and one of the things that he's looking at which made me sit up in my chair is xle right he's just looking at the oil sector which has been overthrown oversold thrown out like the baby with the bath water again and it really hasn't backed off much yeah so if there's an upside trade from here in xle it could be a really exciting one and you know i kind of like that story because everybody's kind of jumped out of that trade i don't i don't feel like there's a crowd and energy at all either way And so we can fade the crowd in tech. We can kind of, you know, try to get there first if there's a bounce in natural resources.

13:06And having made a couple of decent calls to start off the year, at least we're playing with the house's money for the first time all year. So I get a little bit more confident when that happens. Hey, everyone, we're going to take a quick break right now to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing. Have you ever wanted to trade Bitcoin but haven't dared try? With Plus 500 Futures, you can trade crypto without the hassle of opening a wallet. With just a few clicks, you can register and start practicing with their free and unlimited demo.

13:39See a trading opportunity? You'll be able to trade it in just two clicks. Feel ready? You can move to real money with as little as$100 once your account is approved. And the great thing is that in addition to crypto, Plus 500 gives you access to a wide range of instruments. S &P 500, NASDAQ, gas, and much more. Explore equity indices, energy, metals, forex, and beyond. With a simple and intuitive platform, you could trade anytime, anywhere. Experience the fast, accessible futures trading you've been waiting for with Plus500. With over 20 years of experience, Plus500 is your gateway to the markets.

14:12Visit us.plus500.com to learn more. Trading in futures involves the risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus500. It's trading with a plus.

14:28Yeah, that's always good. I really love the way you just laid that out because that's what you're thinking about if you're coming at it from a trading perspective. And I think we all know you want to buy stuff when it's beat up and nobody wants it. That's when you want to be paying attention, but it's so hard to do with the timing, right? And you sort of have all these people convincing you that this time's different and we're on the edge of a revolution. Let's talk about oil because we did have that just to show how unloved it is or how sort of negative his sentiment is, I guess. We had that Saudi Arabia production cut, sort of unusual to have one OPEC member, even if it's a really big, the most important one, cutting on its own because there wasn't enough agreement among them all to cut.

15:08And you did see a reaction, but then it slid right back down. It didn't seem to stick. Yeah, well, the Prince Abdulaziz floated what he called the Saudi lollipop, right, with the second output cut. It may have just been them, but it very much lines up with, for me, like what is a little bit of a toe-to-toe sort of very casual battle going on between Saudi Arabia and the Biden administration. Yeah, let's remember, this is like peak gas time in the US. So the timing is not to be lost on anyone. Well, the timing shouldn't be lost on us either because, you know, if anything, Biden's position now is, I would imagine, is likely to refill the SPR rather than continue to drain it.

15:53I think Saudi Arabia is aware of that. So they probably said, OK, let's tighten the screws on him a little bit and see if he'll come to the market for this. But they still see that they're looking at they want to stabilize the market. And if they buy into this story of a recession and maybe a little bit of less fuel demand or something like that, then they have room and reason to get the next cut on the tape. And if the other countries don't want to go along with them, then so be it, right? They can go ahead and do that. So we're going to see how it plays out. The fact remains, nothing has happened technically.

16:27Nothing has changed in oil, right? The path of WTI crude oil has not changed. Spreads are still loose. There's no urgency to rush in and buy it. It's trading at prices that it has seen over and over and over again over the last several months so unless it starts breaking moving averages on the upside you know i'll be peering through the scope and not the binoculars ready to trade um so i've taken a little bit of a step closer to that trade but until i get a catalyst um you know the bat remains on the shoulder and we're not going to be taking any swings until the catalyst i love i love you i'm saying for everything tony i was gonna love it too many metaphors today i know no no there's never enough I love it.

17:09Achilles was asking exactly that. What do you make of energy selling off OPEC cuts? It sounds like you're saying the focus is really on the risk to demand, on that recession story that everyone's waiting for. Yeah, well, you know, he gets, you know, the Saudi Arabia headline gets, you know, I think they did it a little bit differently this time, right? Rather than waking up Monday morning to the production cut out of the blue, right? totally out of the blue like last time you know they got to bump up to 80 which was just right into technical resistance and if thing fell straight back as fast as you can say prince abdulaziz right so this time they telegraphed it a little bit they probably let a few longs get in and say you know what why don't we buy this because there's an opec meeting and these guys are definitely going to cut production and so it lets some traders get on the upside and make some money and they probably sold it right out into the rally and i feel like the economic story is where if you're short as a fund and you get this headline and it's not a strong enough headline to elect stops on the upside because they are getting short oil now i don't think it's a huge spec position but it's definitely leaning on the short side you press right you come in oil's into resistance maybe you don't have your full position on and you say okay let's get our full short size position on right here into this opec burst and so we'll see where the price shakes out but if If we start to draw a bullseye on the short side of the energy trade and the long side of the tech slash AI trade, I will definitely play for a mean reversion in both.

18:43Yeah. And we're in an interesting period, too, because we had the ISM number out a little below expectations for services still hanging around 50, though. It's not falling off a cliff. And now we're not going to have a huge amount of data because we had jobs last Friday. Some of it's already come out in a Fed blackout period. So there's not going to be a lot to sort of be able to hang your hat on in terms of looking for breadcrumbs about what's going on. So everyone's going to have to kind of sit where they are, I think. Bo asked, do you think they, meaning OPEC, can throttle or Saudis, throttle production enough to prop up prices during a bona fide economic downturn?

19:18No, you know, like that'll be difficult. And maybe not because of the, you know, maybe not because of the demand drawdown, you know, possibly because, you know, we've got more capacity coming online in a couple of different ways in the energy markets. Crack spreads have softened a little bit. You know, the market's just not as tight and as red hot as it was, you know, when we were sort of dealing with the earlier days of the Russia response to the NATO invasion of Ukraine. So it's really, really tough to tell down here. But at least we've got the market at levels where it's comfortable trading these prices.

19:59It's establishing a sideways range. It's not spending a lot of time in the 60s and coming back. The problem is the narrative is strong enough to keep a lid on it right now. You know, there's enough fear of demand destruction and enough fear of extra capacity that if you've got a short on that's working, let them have it on every rally still. Yeah. So I feel like that's what we're fighting in the energy markets right now. Yeah. And that recession, the recession story is going to play out over a longer period of time because even, you know, for anyone who turned in Friday, you know, Darius Morale had different ideas about the timing of the recession.

20:32Raul thinks we're already in it or we already saw it. But you're going to start getting the data look weak if that's true, because it will lag. So really where we are in this whole economic cycle is up for debate. And then you've got China feeding into it, too, and winter. And so there's a lot. It's a trade. I know, Tony, this is why from your trader perspective, you're on it all the time because it can change and it can change relatively quickly. I feel like the economic picture has maybe deteriorated a little bit more given the employment data last week and some weaker data that we've seen, or at least sideways to weaker data.

21:11Where's the stock market? It's higher. So everything that we said was correct about warning investors, look, just because there may be a recession coming, it doesn't mean stocks have to go down. So at least we gave some good advice there. And we've got a bounce to trade, right? But everything is kind of one trade at a time here. The guys in my Slack channel have been calling it a bar crawl, you know, this year because we can't get out of the gate with a big, huge trade. Everybody's getting black eyes left and right. But we're still willing to take risk and order the drinks up. You know what I mean?

21:43So it's a little bit of a bar crawl feel to it. But we're scraping together a couple bucks in the last few months. That's awesome. So question from Colin, and this is going to revert back to what we were talking about a little bit earlier on you watching the S &P level. Does this market have anything to do with JPM's collar option trade? It's very specific, so I don't know if you're watching this. I hear 43.20 on the S &P is an important number. Could very well. I'm not on the inside of the big options market. I don't know about that collar. I'm sure it could be something that caps the market.

22:19I'm not fading his idea at all if the trade is on and out there, et cetera, et cetera. Maybe it's something that will chew through. Maybe it's something that will run into like a brick wall and fail. I have no idea. I really don't. And similarly, nothing has changed. The S &P is sort of floating away and negating the idea that there's a head and shoulders topping pattern, right? Like what we saw was a potential head and shoulders, but the right shoulder just kind of broke off and sailed away. What we're doing now is we're sailing to a new high and we've got to figure out where this is going to fade out and pull back.

22:56The one thing that hasn't changed, the curve's still buried at 60 basis points. So this is nonlinear chaos trading, right? I'm still expecting that. We're not out of the woods. We're not into a, okay, here we go, trending toward S &P 5K. It's not one of those years. It's not one of those years. We're going to take another quick break to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

23:24Yeah, yeah, this disconnect between what's been happening with stocks and the bond volatility. You know, everyone has, and how many months has it been? We've been saying something, they've got to come, they've got to meet, someone's wrong, something's on the wrong side here. But it hasn't happened, it's just continued. Which I think Jem last week described as just a rubber band that keeps stretching. which sounds dangerous if that's the case. So question from Doug, what do you think of a commodity bull market led by battery metals, copper, lithium, cobalt, and nickel, and not iron ore, steel, coal, and aluminum?

24:00Couldn't very well happen. I mean, you're not going to catch me getting bearish any of those rare earth and specialty metals when we're trying to step on the gas toward carbon neutral, when we're talking about ending farming to get to our climate zero uh our net zero goals you know once they start socializing end of life as one something that's reasonable uh to pursue in pursuit of our climate goals then god knows what's going to happen next quite honestly the problem that i have with cobalt and molybdenum and rare earth metals is they're not liquid they're not trackable and they're not really tradable so yeah they may go up the mines may go up i'm not against any of those trades or any of those ideas at all, it's not the style of trading that I like to do.

24:47I like to pick a sector and bet on it or against it. Yeah. Absolutely. We've done, if you're interested in that, Doug, I'm sure you've already looked, but go back in the platform because we've done some deep dives into those markets with some really knowledgeable people and it's super interesting stuff, but the liquidity and the price transparency is challenging. So you really have to do your homework and make sure that if you're following somebody that they're doing their homework on it. Question, Tony, you mentioned, I think you mentioned earlier home builders. You also mentioned gold miners, right?

25:21Are you looking at gold here? Yeah. You know, I just took the proceeds of my tech trade. I was fortunate enough to be long tech for the end semiconductors for the NVIDIA headline. That is always an exit for me. for me no matter even if it keeps going that's kind of when i'm when i'm happy to liquidate and let everybody in the market chase the disco ball and let me get back down in the weeds and look for my next trade so what i've done is basically taken the proceeds of the tech trade and kind of rolled into some gold miners i very much like the fact that gold has pulled back to a trend line and 100-day moving average support while the dollar index trades into resistance.

26:06So now I can start gauging the levels where I think the dollar index can fail and gold can go again. I love the fact that both gold, gold stocks, and gold stocks versus gold are all dramatically oversold in terms of RSI and stochastics. So that's something that when those stars kind of align, I can start pursuing buying dips in a sector rather than chasing rallies, which I like to do more often than not. So the gold miners, it's a really attractive trade to me. They look like they are in a pretty healthy channel. We understand the reason that gold pulled back and that stocks pulled back. And if we understand that reason, but think that we're still in a secular bull market and that gold miners are going to be one of the sectors that's standing at the end of the year, like I think they're going to be this year, then I'm happy to put my money on the table when they pull back into support.