I-Ran Away from Trading Crude Oil on Headlines

When a market has every logical reason to rally and yet fails to do so, it is typically a sign of the dominant technical pattern asserting itself above all else. 

Applied to the crude oil market, with the Iran/Saudi Arabia news over the weekend one would have thought that crude would finally be able to muster that sustained rally which many have been predicting for months, even quarters, on end now. 

But a simple look at the daily chart of USO, the crude ETF, revealed that the 20-day simple moving average acted as resistance price and continued to do so even after the alleged catalyst for a rally. On the updated daily chart, below, we can see that crude is actually following-through lower now after yesterday's fade. 

On social media yesterday, we noted as much, not so much to declare an easy short setup but rather to at least not acquiesce to the visceral reaction by many to simply chase crude higher due to the news--The technicals suggested otherwise and still do. 

Alternatively, the firearms plays were already technically set-up, among the best charts in the entire equity market, well before the "good news" came out for them in recent days, which is why we played SWHC long inside Market Chess Subscription Services, taking profits this morning and looking for a reentry in the coming days. 

The bottom line is that trading off of headlines on a standalone basis often misses the mark not due to the actual news itself and its potential significance, but rather because of failure to at least overlay the news with the actual message of the market in terms of the broad trend and technicals.