Oil prices fell. Investors waited for details. The details concerned sanctions. The sanctions target Iran. Washington called them the toughest ever. Nobody explained how you trade on Monday based on information arriving Tuesday.
Traders sold oil because something might happen later. This strategy has a name in technical analysis. Panic. The alternative strategy also has a name. Also panic.
Iran has been sanctioned since 1979. Every few years Washington bills new sanctions as the toughest ever. This is like your gym billing January as the toughest month ever. Sure. Definitely. This time it's different.
The word toughest appeared in quotation marks. Someone at the Treasury Department said it. Someone at Reuters typed it. Someone on a trading desk read it and sold crude futures. The chain of human intelligence on display here rivals a game of telephone played by concussed toddlers.
Oil moved because investors awaited details. Not because they received details. Not because they analyzed details. They awaited them. Awaiting is not research. Awaiting is what you do at the DMV.
The sanctions targeted Iran's oil exports. Iran exports oil. Sanctioning their exports means other countries export more. Which countries? Doesn't matter apparently. Sell first. Google later.
Retail traders saw the headline and checked their portfolios. Their energy stocks were red. They had no Iran exposure. They had no sanctions exposure. They had a Robinhood account and a dream. The dream died at 9:47 AM Eastern.
The toughest-ever sanctions would arrive soon. Prices fell in anticipation. When the sanctions arrived, prices would move again. Probably the opposite direction. This is called efficiency. The market knew something. The market knew nothing. The market moved anyway.
Washington billed them as toughest-ever while oil traders billed their therapists for Monday emergency sessions.
Photo by Amin Zand Miralvand on Unsplash
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