Oil jumped more than 1% after Trump rejected Iran's proposal to reopen the Hormuz Strait within seven days. The Strait of Hormuz. That narrow waterway through which 20% of the world's oil passes. Iran said they'd reopen it and talk nice if America met their conditions. Trump said no. Crude rallied.
Retail traders saw the headline and bought energy stocks. They read "Hormuz" and "rejected" and "conditions" and decided this was finally the geopolitical catalyst they'd been waiting for. The supply shock. The big one. They checked their portfolios seventeen times before lunch.
Here's what actually happened. Oil was already going up before the news broke. It kept going up after. The headline gave CNBC something to say between commercials for investment apps that will lose your money faster than you can deposit it. Correlation met causation at a bar. They went home together. Nothing meaningful occurred.
Iran makes an offer with conditions. America rejects the offer. Oil moves 1.2%. Technical analysts everywhere tried to draw a trendline connecting these dots and gave up halfway through. The 50-day moving average doesn't care about diplomatic proposals. The Relative Strength Index has no opinion on the Strait of Hormuz. Support and resistance levels were established weeks ago by algorithms that can't read.
Some guy in Tampa just bought USO calls because he thinks he understands Middle Eastern geopolitics now. He read three paragraphs. He's already planning what he'll say at Thanksgiving when his family asks how his trading account is doing. He'll mention Hormuz. He'll say the word "strategic" twice. His position will be worthless by Friday.
The chart said oil was going up before Iran said anything. It'll say where oil goes next long before the State Department issues another statement nobody reads.
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