Brent oil jumped 4% Thursday because the United States is reportedly sending a third aircraft carrier to the Middle East. Not a second carrier. A third one. Because apparently two floating military cities weren't enough to make traders panic-buy energy futures.
The aircraft carrier does not pump oil. It does not refine oil. It does not transport oil to market. It floats near oil. This proximity to petroleum is worth a 4% move, according to people who manage other people's retirement accounts.
The carrier strike group includes destroyers, cruisers, and roughly 5,000 personnel whose job is decidedly not to increase global crude supply. Yet Brent responded as if OPEC just announced they're shutting down production to focus on cryptocurrency mining. The logic chain goes like this: more boats equals more tension equals less supply equals buy now ask questions never.
Somewhere a retail trader named Kyle just went long on crude at the absolute top of the Thursday spike because he saw the headline on his RobinHood notification and thought this is it, this is my chance to finally understand geopolitics. Kyle does not know where the Middle East is on a map. Kyle does not know what Brent crude is named after. Kyle knows that aircraft carriers sound important and 4% sounds like a lot.
The technical picture told you none of this mattered. The 50-day moving average said ignore the boats. The RSI said ignore the boats. The volume profile said ignore the boats. But the boats showed up anyway and Kyle bought the top because CNBC used the word "jumps" in a headline.
By Friday the move will fade and everyone will pretend they knew it was noise all along, but Kyle's stop loss already got hit at a 6% loss because he set it exactly where every other moron sets it.
Photo by on Unsplash
Leave a Comment