Backtest: When the daily count of news articles mentioning Iran, Hormuz, or sanctions i...
When a headline screams about Iran, Hormuz, or sanctions, the reflexive trade is to buy energy stocks. Supply risk should lift XLE, at least for a few sessions. This study tests that reflex systematically: top-decile news days over a one-year rolling window, buy at the close, exit five days later.
The result is a modest positive — 75 trades, a 53.3% win rate, and a 12.01% gain on $100,000. But against a buy-and-hold SPY position that returned 68.30% over the same stretch, the strategy lagged by over 56 points. The news edge exists; it just isn't big enough to beat simply owning the market.
The full backtest below breaks down every trade, the return distribution, and the methodology.
When the daily count of news articles mentioning Iran, Hormuz, or sanctions is in the top decile of its one-year history, buy XLE at the close; exit after 5 trading days. Geopolitical flare-ups trigger a supply-risk rally in energy stocks that persists for a few days before fading.
How this was measured
This is a simulated backtest generated from the plain-English strategy below, executed bar-by-bar on historical market data using the price + news data mode with $100,000 starting capital. Strategy: When the daily count of news articles mentioning Iran, Hormuz, or sanctions is in the top decile of its one-year history, buy XLE at the close; exit after 5 trading days. Geopolitical flare-ups trigger a supply-risk rally in energy stocks that persists for a few days before fading.
The key numbers
The charts
The takeaway
The strategy returned +12.01% on $100,000 starting capital across 75 closed trades with a 53% win rate. Over the same window SPY buy-and-hold returned +68.30%, so the strategy finished trailing the benchmark by 56.30 points. Best single trade +5.62%, worst -10.50%.
The fine print
- Simulated results on historical data — fills, slippage and costs are idealized.
- Past performance does not predict future results.