USO Update

Yesterday I wrote about USO breaking above some long term resistance, the longer charts on USO look good and the IEA's strategic petroleum release fundamentally sounds like a no win situation. When or if what is left of the OPEC cartel led by Iran takes their revenge by cutting output to offset any price declines by the release, oil will likely see increased volatility and upside, unless the wild card Russia, who unlike Saudi Arabia actually does have the proven reserves to effect the supply/demand balance, chimes in, oil should see higher prices not so far off.

As for yesterday's breakout, the thing that bothered me and the thing that is needed to send oil in to the mark up phase is volume, specifically I was and am concerned about the lack of it.

So USO s at a transitionary point right now and should be watched carefully.

 The breakout yesterday and today's price above the red trendline is the precarious position oil/ USO is n. Volume should have picked up substantially on such an important break out.

 The 60 min chart reflects the price/volume action above resistance, still volume has not picked up substantially which casts a shadow of doubt on USO until such time as that happens.

 As I said, the longer term charts, much lke the SPY through June, look good (60 min)

 The 30 min hart shows some more detail, but largely looks good.

 At the 15 min timeframe, we are not seeing confirmation of the breakout yet, it could still happen, but this is a warning flag.

The 1 min chart shows details of yesterday and today, the rally in the early afternoon was turned back by a negative divergence and was the opening strength this morning. It will be important for USO to hold above the trendline, around $37.55. You may want to set an alert. In my opinion, should USO turn back down from the breakout, it will likely did strength on a pullback as the SPY did after the 6/23 drop from resistance that 3C warned of.

Just so there's no confusion, DUG which I just posted on is different then USO. DUG is a inverse 200% short of the Dow Jones US Oil and Gas Index and as such, it's components include oil and gas service industry components as well.