The 43rd time is the charm

The 43rd Time Is the Charm

Peace in the Middle East was priced in again this morning. The market is finally past it.

Peace got priced in this morning. That makes 43 times in two months, give or take.

Today's headline was Iran will be allowed to sell oil while negotiating. Crude dropped on the news, then stopped and started drifting back.

I have stopped counting because they blur together. So has the market.

The first time a headline like this hit, the move was real. This morning it barely registered before reversing. That is the trade.

When the market reacts smaller and faster to a headline it has seen before, the pattern is being arbitraged out. The trade is no longer the news itself. It is how the market reacts to the news.

If you are still trading the Iran headline, you are behind the curve. 

A headline stops moving the market when participants stop believing it will. The first move comes from people taking the news at face value. The fade comes from people who have seen it all before.

Once enough people have seen it enough times, the move stops happening at all. That is where the Iran headline is right now, and the market is finally past it.

What you do with that information is the part that matters.

You stop trading the headline. You start trading the second-order effect: how the market reacts to a headline it has seen before.

Which is what I do with expected moves in the TheoTrade Chatroom. If you’re not a member, now is the time to get started because volaility is picking up. 

Click here now. 

To your success,

Don Kaufman