Refiner stocks hit a run so rare that history books actually track it. The article says take profits. History says take profits. Every chart pattern says take profits. Retail traders heard all of this and decided to open new positions yesterday.
The setup here is perfect. An entire sector rips higher for months. Someone publishes a piece that says "this ends soon" with actual historical precedent attached. The precedent shows these runs die fast. The response from guy-who-just-discovered-options-trading is to treat the warning as a buying opportunity. He read "unprecedented" and thought it meant "different this time."
It's not different this time.
Refiners make gasoline from oil. That's it. They don't cure disease. They don't launch satellites. They turn one liquid into another liquid and sometimes the margins are good and sometimes they're dog sh*t. Right now margins are good. History says when margins are this good for this long, they stop being good very soon after. This is not a mystery. This is not a riddle. This is reversion to the mean wearing a hard hat.
But some guy with $4,000 in a Robinhood account saw the word "unprecedented" and assumed he found alpha. He didn't find alpha. He found the end of a cycle that's been documented six different times in the past thirty years. He's buying a stock that already ran. He's doing it after someone told him not to. He's going to blame the market when it doesn't work.
The article suggests you take profits if you've been riding this trade all year. Reasonable advice. Anyone who rode it all year already sold. The only people left are the ones who showed up late, bought high, and are about to learn what "time to take profits" actually meant.
They'll figure it out when there are no profits left to take.
Photo by Infrarate.com on Unsplash
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