USO Update

There are two outlooks on USO, the first was pre-Egyptian trouble, the second is the current situation.

 Before the Egyptian situation got out of hand, it looked like USO was breaking down and was going to pull a false upside move to shake out the shorts, much like I was talking about yesterday with the break of the SPY below the linear regression channel. Now the question is, "is that still the case" or "are they going to pull it back to accumulate USO more heavily?"

 Here's the breakdown in 3C in the channel, you see the negative divergences on the 60 min chart here. There was accumulation and this is what I suspect was going to be the false upside move to shakeout shorts and perhaps trap longs on the way back down. The escalation in Egypt just happened to take place at the same time they were launching the upside move.

 10 min USO... Again, a closer look at the bounce-type accumulation and here we see the move up. I've been suggesting, if there is a more bullish outlook on oil because of the middle east problems, then I suspect at some point they would pull it back to accumulate a larger position.

 As I mentioned last night, the negative divergence on the 5/10 min charts, here's the 5 min showing a negative divergence right at yesterday's highs. 3C has continued down in a leading negative divergence today.

The 1 min chart shows the same negative profile.

So the question is still, is the original plan in play or has the sentiment shifted toward discounting the trouble in the middle east with higher oil prices. If the second is correct, then any pullback should see very heavy accumulation. Today looks like it could be the start of that pullback.