Tensions spike at key oil shipping route — go long on major oil producers
The U.S. has reinstated a naval blockade on Iranian ships and attacked targets near a critical global oil shipping route. This is causing oil prices to spike as the world worries about a disruption to global fuel supplies.
Idea
A naval blockade directly threatens the flow of massive amounts of global oil. When military conflict restricticts major shipping routes, oil prices usually shoot higher very quickly. Higher oil prices mean much bigger profit margins for the companies that drill and produce the oil. Buying shares of major oil companies gives you a straightforward way to cash in on this sudden geopolitical tension.
Advanced analysis
Can a naval blockade push XLE's rate of change from 1.26% past the 2% entry line before RSI at 70.4 signals the geopolitical bid is already spent?
Will XLE's rate of change push past the 2% threshold the strategy requires before the geopolitical bid fades?
Can the XLE backtest's 54% holdout return survive Chevron's negative revenue growth and declining returns on equity?
How damaging is the strategy's 35% worst-case drawdown when Chevron's EPS has already fallen 32% year-over-year?
Could the next escalation in the Strait of Hormuz be the event that finally pushes energy equities through the strategy's entry threshold?