Iran Cut or Did not Cut Oil Exports to 6 European Countries?

I haven't seen a market so driven by "persistent" rumors since 2008; what I mean in underscoring persistent is other then the "QE3" rumors we here anytime the F_O_M_C meets or a F_E_D speaker is set to, well... speak.

Earlier today the news was that Iran had cut oil exports to 6 EU countries: the Netherlands, Spain, Italy, France, Greece and Portugal in retaliation for EU sanctions according to Reuters.

Although I'm not sure when the story first broke, it seems to have been around 7 a.m. this morning. Here's a chart of CL (Crude Futures).

As per usual, it didn't take long for the story to be denied...

Iran's Oil Ministry denies cutting oil exports to EU

" Iran's Oil Ministry denied state media reports on the Islamic state stopping its crude exports to six European countries on Wednesday, February 15, Reuters reported.

"We deny this report ... If such a decision is made, it will be announced by Iran's Supreme National Security Council," a spokesman for the ministry told Reuters."

As for USO, since yesterday's update it doesn't appear much has changed.

 USO remains above the downtrend channel, which as I mentioned yesterday was extremely obvious and bound to be shaken out sooner or later, especially in a market this size-everyone can see such an obvious pattern. The Algo induced move earlier this week, I suspect had something to do with it as NANEX has confirmed the presence of algos operating on that quick move up. While we don't know what their intension was, I would guess it probably had something to do with shaking out this channel as the dogma of Technical Analysis would cause most traders to stop out on such a break. I of course view it a bit differently as the market has evolved since the dogmatic views of Technical Analysis were enshrined nearly a century ago. You have to keep up with the changes in the market and technical traders still haven't adjusted to changes that are now over a decade old.

 If you click on this chart, hopefully the 2-day Trend Channel (which is what I proposed as a stop on a short trade) is still holding at this point. Remember, all stops with the Trend Channel are on a closing basis unless otherwise noted. To the left you can see the uptrend's stop out at the red arrow and while there were some additional gains, I hardly think they were worth it after the Channel issued a sell signal as there was a lot of opportunity cost there. The white arrow points out the approximate area of the current stop.

 This short term 1 min 3C chart shows some small accumulation at yesterday's lows, after there was distribution on the open sending USO lower in what has recently become a trend of fading early strength. I would suspect if there was inside information about the Iranian news, we would have seen much stronger accumulation, in the yellow box there is none, only at 1 p.m. and on a 1 min chart. There's a current negative divergence this morning.

 The next timeframe (the longer time frame, the more important to the longer term trends, although this is still intraday to several days), the 2 min chart, shows the negative divergence (distribution) on yesterday's gap up open, sending USO lower to the 1 p.m. intraday lows where we saw 1 min accumulation; note the accumulation at the lows was not strong enough to bleed in to the 2 min chart. We have a current negative divergence from yesterday's late afternoon trade through present as USO has lost momentum over the last 3 days and last 2 especially.

 The 5 min chart also shows no accumulation at the 1 p.m. lows yesterday so the only accumulation was on a 1 min timeframe, which would be in preparation for an intraday move higher (the timeframe typically associated with market makers/specialists and more recently HFTs which are front running the traditional middle men; stocking up in preparation to sell in to intraday strength). There remains a relative negative divergence on this chart.

The daily chart shows the 4 stage cycle I often mention, 1) accumulation at the October lows at the white area, 2) Mark up in which 3C is in sync and confirming USO's move higher, 3) Distribution (at the red arrow) which started well in advance of the channel moving down in the yellow timeframe area and in a flat area which is where we most commonly see smart money moves, whether buying or selling. Stage 4 is decline, so we are somewhere between late stage 3 and early stage 4 and this despite the Israeli Embassy bombings yesterday and the general geo-political tone in the Middle East especially as it pertains to Iran.

I'll keep an eye on USO for any further developments.