USO UPDATE

Just to be clear, I'm intermediate to long term bullish on oil/USO, I think the events in the middle east will reshape the middle east and create many power vacuums. The first domino to fall, Tunisia, has already seen radical Islamic movements start to grab for power. Egypt will be a big prize (although not the biggest) and protest continue there as the people are realizing what was said here weeks ago, the regime wasn't Mubarak, he was chosen by the regime, the regime is the military and they gave themselves 6 months-enough time they hope to let things cool down, make minimal concessions and keep the status quo which is the military regime retaining power and no real change in Egypt. EGPT is an ETF I like for this very reason. I believe at some point, the people of Egypt will come to blows with the military which is organized. It would be an ugly revolution and I do believe that the Muslim Brotherhood with the help of Hamas is organizing and preparing for such an eventuality. It's not the democratic favorite who wins, but the best organized so Egypt alone is a template for the seeds of revolution that are being sown throughout the region. Overthrow of a government is the first step in a much larger chess match and a much more dangerous one. Thus I'm long term bullish on oil and I think the US inventories report this morning shows that the US is aware of this as well as the strategic reserves will likely be filled to maximum capacity ASAP.

Here's USO, which in the short term, I think may see some downside. There are various reasons I could give for this, I just don't know which is the real reason/reasons.

USO's price pattern is wedging, this is a bit bearish here.

An hourly negative divergence on 3C

An important 15 min negative divergence

A 5 min negative divergence on the news of the inventories report this morning. Price did gap up, but it seem there's some profit taking into the gap.

The 1 min chart confirms the findings of the 5 min chart

Whether we retrace the entire wedge or not,  don't know. I kind of doubt it at the speed of the news cycle, but who knows if we actually get boots on the ground.