USO Take

The Syrian Crisis is emerging as the biggest problem in MENA right now. It appears the MB may be operating there, although there are a contingent of religious minorities that would not welcome their presence. Assad made a huge mistake in promising reforms and not delivering. He made a worse mistake in escalating the violence and firing on mourners at funerals. The Syrian people weren't like the other MENA revolutions, they weren't calling for Assad to step down, they just wanted to see the reforms he promised, but that's changing. When you're friends and family have been killed by Syrian security forces, it's reasonable to expect sentiment toward Assad to change.

If Syria falls, and who knows what replaces it, this will open a door for the Israelis should they decide to make a run at Iran. The Iron Dome the Israelis deployed is not only stopping Katyusha rockets, it's stopping mortars as well! So the Israelis have just changed the balance and calculations for would be attackers. Syria right now is becoming the biggest, geopolitical card in the game and that should effect oil, right?

However we did observe some interesting things as the Egyptian crisis deepened, oil didn't respond. The reason? This is my opinion, but before Egypt erupted there wasn't an accumulated position in USO, it was actually moving in to a down cycle, so that needed to be changed and the locals needed to accumulate which meant suppressing prices.

I have a feeling, although it's speculation, this is what we are seeing now, smart money wants to accumulate a bigger position before the resistance zone is taken out and all the retail traders pour in to chase the mark up period.

 Here's the daily USO chart and the resistance zone we are at right now.

 Here's an example run trying to break resistance, notice how it was distributed quickly so it would fails and prices would not break through, starting the mark up cycle.

The red box is the last significant accumulation period, so it's probably time to restock but the chart also shows that USO appears to be in good shape otherwise.

I'd set an alert for a breakout of USO and be quick to move on it with a tight stop, if the breakout is real, the stop shouldn't get hit. One thing you should know, oil responds intensely to anything revolving around Israel even though they are not an oil producer.