USO/Oil Update

Ok, USO has broken a mjor support level and taken out the obvious $32 stop level, look at the volume as it passed below $32, a sure ign the specialist was gunning for stops. At the same time we saw a 3C divergence (positive). False breakdowns are always something to keep a close eye on or false breakouts. If we move back above support levels, the longs may jump back in the trade, the shorts that jumped in on the break of support are now at a loss and being squeezed, this is my "Judo Concept" where the market uses retail or dumb money's (us common folk) actions to feed (in this case) a rally. The short squeeze would propel the market higher, so we want to watch for a move above the $32.40 area as this will put a real pinch on shorts and create that upside momentum. As a friend of mine says, from false moves come fast moves (in the opposite direction). Here's the chart and considering the dollar's performance this morning, it's not so far fetched that the oil trade may still be alive and well.

At 10 am exactly there was a huge red volume spike as prices broke $32-again, the human mind gravitates toward whole numbers and makes it easy for market makers and specialists to go on fishing expeditions to trigger those stops and create a nice payday.