Quick Oil Update
Iran, Trump, and Seasonality
Wanted to get this quick article out to everyone as the path Oil takes next will also be a key signal for the overall market.
You’ll see below that during typical Mid Term Years we see oil ramp up from here and peak at the end of September. But, and this is a key but, during 2nd Term Presidents, oil often just keeps heading lower into year end.
What path do you think we have taken so far? They both align the same really until the end of July. So I hope you all see now is the time to really see what path it is going to take and plan accordingly. The tell should be what happens that first week of August. If it declines from there, 2nd term path, tailwind for equities. If it continues higher, headwind for equities.
On one hand we have Iran chaos escalating, on the other we have Mid Terms coming up and a highly motivated Trump to squash this as soon as possible. What lever can or will he pull?
My own lean? Hard to say here, but I expect a correction in Q3, oil ramping would definitely be a reason that could happen. The other view I see is that the market rallies in early August before the correction begins, so both could be true where oil tops but the market still corrects due to other reasons (there are several)
What path do you think oil takes?
I’ll be sharing my own strategies and positions as we move forward from here, if you haven’t checked out the premium access, it is a great time to give it a spin. Cheers!
Violence
The thesis that the market should hold up into Opex week proved true but sure enough, as the week came to a close we started to see escalation out of the Middle East and Semiconductor catalyst hit the news creating weakness across the index’s and key leaders.
Primer: How To Find Fat Pitch Trade Setups
The Apple trade to start off Q3 was one of the best ones of the year, over 400% return in 3 trading days.
I wouldn't dismiss effects from interrupted flows earlier in the year. Headlines might spike things, but commodities have underlying realities that we in the financial markets often misjudge. I very much follow HFI's arguments here for the last months.