USO Update...

Crude has definitely been a tricky asset to follow, everything you see says crude should be sky-rocketting as far as geo-political tensions go. On a more fundamental basis of growth, the argument can easily be made for lower crude prices (for example, a slow down in China-a major importer of Iranian Crude).

The US has been engaged in what looks like some sabre-rattling with Iran, whether it's to exploit the growing rift between the religious hardliners that ultimately set policy and Ah-MAD-inejad or perhaps to exploit what is being called a lame duck presidency as Ahmadinejad tours South American leftist governments looking for friends, it's hard to say, but there does seem to be an element of antagonism from the US. I'm surprised crude didn't move much this a.m. on the announcement that an American born, Iranian descendent, who is an alleged spy for the US has been condemned to death. 

 USO is stair-stepping lower into the gap. There have been a few head fake moves in yellow, but lower it goes.

 This particular head fake move in yellow also created a candlestick resistance zone I mentioned last week called a 'tweezer top' and it held as resistance.

One side of my brain says, Crude must move higher on escalating tensions, even though the EIA has announced over the weekend that strategic reserves from several countries would be released if there were any disruption in the flow of crude. The other half continues to watch the longer term 60 min trend which just hasn't shaped up to a more bullish position, in fact it's been negative for a while and comparing the current 3C position with price levels that are relevant, USO is actually lading negative on the longer term trend.

A gap fill should give us more information on what USO intends to do. However, even today as escalations were ramped up with the announcement of the execution sentence for an American citizen, Crude just hasn't responded.