Oil dropped on news of a US-Iran deal framework. Airline stocks rallied. The U.S. Global Jets ETF sits near a new high for the year. These two facts share screen time in the same headline, which means someone thinks they're related.
They're not.
Oil fell because a deal framework emerged. Jet fuel costs matter to airlines. Lower costs mean higher margins. Higher margins mean stock goes up. This is the story financial media wants you to believe. It's clean. It's logical. It's completely f*cking useless.
JETS has been climbing since February. Oil has been bouncing around like a drunk at a wedding. The correlation exists only in the imagination of whoever wrote this headline. One trader is playing the move, according to the summary. One trader. Not two. Not a wave of institutional money. One guy looked at his screen, saw JETS going up, and decided today was the day to tell everyone about it.
The chart doesn't care about Iran. The chart doesn't read press releases. The chart made a higher low three weeks ago, broke through resistance at $23.50, and held it on the retest. That's the trade. That's always the trade. The geopolitical noise is just set dressing for people who need a story to click the buy button.
Retail traders will read this headline and think they've unlocked some deep connection between crude oil diplomacy and airline stock performance. They'll buy JETS at the top because the story finally makes sense. Then they'll watch it pull back 8% and wonder why the US-Iran deal didn't protect them.
The move was over before the headline printed.
Photo by KOBU Agency on Unsplash
Leave a Comment