USO Update

USO is lower this morning, primarily due to the RRR hike imposed by the People's Bank of China, from what I see so far, I doubt this will be a major pullback, although Gadhafi pulled a fast one that may also cause oil to pullback a bit. He declared a ceasefire so it makes it a bit hard for the UN to bomb him out of power which of course was the end game. We'll have to see how this plays out, there's no doubt the decision has been made that his time is up, but he made a very smart move. In the short term, this should also have a calming effect on oil.

 This morning's negative divergence, or probably more aptly, 3C confirming the move down.

 The 5 min chart doesn't look too bad yet, but there was a lot of volume early on, we'll have to see if it catches up-the quicker it catches up, the more serious the distribution in USO/Oil

Still the longer term view is bullish. There will always be bumps along the road, you can't get too caught up in the daily gyrations, but rather use them to enter or add on strength, so long as the trend remains intact.

Right now, I'm thinking we'll see a downside target in the $39.50 area.