Are We Sure Oil & Gas Are Fades?

"When you get a range expansion, the market is sending you a very loud, clear signal that the market is getting ready to move in the direction of that expansion." -Paul Tudor Jones

The above quote by Paul Tudor Jones seems applicable to gasoline and oil, respectively below on their ETF monthly charts. 

On the back of Trump's decision to commit military action versus Iran and the subsequent fallout all throughout the weekend I saw countless predictions that the oil rally would be short-lived, a quintessential sell-the-news event, if you will. However, as you can see both gasoline and oil are gapping above a tightening, multi-year range after more than three years of consolidation. 

Given this protracted period of sideways action, one would think that giving the breakout a fair chance would be wise. But, again, there seem to be far more skeptics than galvanized energy bulls at this particular juncture. The most likely explanation for this phenomenon is recency bias, coupled with continued underweight positioning in the energy sector at-large by most retail and institutional players alike. 

Indeed, a three-year breakout from consolidation for oil and gas would be a broad game-changer for the economy and pressure on consumers/businesses. 

Thus, color me a bit more bullish on these moves than many others who seem to be champing at the bit to short oil and gas. And that may very well be the reason why the bond market is selling off today, on fears that an inflation spike is afoot, this time led by oil and gas.