USO Trade

Yesterday I featured USO  as it is moving in to an area of highly increased odds of trending, actually it has been trending for several months, just laterally, but a lot changed technically in USO yesterday, make sure you see yesterday's article if you didn't already see it.

 Here's the first 3 stages of a cycle and we are seemingly entering the fourth, in white 1) accumulation. Then USO moved to stage 2) Mark up, then in red, stage 3 distribution. During this period we had seen many geo political developments that were bullish for crude, I kept the shorts positions because of the 3C chart and even with the threats of Iran/Syria, USO didn't break out, but stayed in a range under distribution.  Stage 4 is decline, we are just entering that stage and it is usually a pretty good trending stage and it usually falls faster and harder then it went up.

 USO breaking support on deteriorating technicals, it's not always easy to go against what common sense may tell you especially with the middle east situation.

 If you are not already in the trade and interested, look for any opportunity inside the gap today.

USO has been very volatile lately with wide ranging bars averaging about 2% moves a day (from low to high), this is keeping the Trend Channel fairly wide, but it moves quickly and adjusts to new volatility, I would keep the Trend Channel stop of $38.50 for now, if you treat this as a position trade. SCO is a leveraged alternative you can buy as an inverse ETF, but at this point the volatility will be twice as wide, I expect the volatility will settle in a bit, but for now, if you use SCO, you'll need a wide stop that accounts for the volatility, email me for updated stops.

Good hunting!