USO Update

Crude has had a good last 2 weeks with USO up 8.6%, but is this a reversal in trend or a shakeout as USO had been lateral for over 2 months and trending down for a month. The media says this is on Iranian escalations, however over the last 3-4 months we have seen very provocative actions, war games, launches of long range missiles that can easily hit Israel, Nuclear events, war games in close proximity to US Aircraft Carriers, Russian threats, Chinese threats, and on and on.

This is the same media that say "The Greeks Have Won Their Bailout", when we know they are a long way from that reality and maybe further then ever. Why would USO suddenly be reacting? Sure we can come up with events such as shutting down flow to Europe, but this move started before then.

Lets take a look at the charts and see what's going on....

 Here we see the lateral trend and the down trend that started and a break above the range, although we have to see how the GLD situation plays out, the concept of a convincing move is the same and ironically USO just broke above the range yesterday on good volume, yet today there was no follow through.

 Here's yesterday's and today's daily candle, today's candle is a doji which is a loss of momentum and often a reversal candle. Volume today is higher then on any other previous small bodied candle within the trend, which also is a bit suspicious, there were only 3 days of strong daily candles, the first day of the move, the 4th day which closed at a loss and yesterday, with yesterday being the weakest of the 3 with a longer upper wick.

 Intraday, we saw a parabolic move up to a new high (you know how I feel about parabolic moves, they usually don't end well), and then nearly as fast a move down and this move was the heaviest intraday volume seen in 7 days, it does have the characteristics of a churning move.

 Here's the 30 min chart, you can see the negative divergence over the last 2 days and it wasn't so strong as to move much above 3C's highs, the red box is where the downtrend was.

 The 15 min chart that showed the October accumulation and has been heading down since the range started, which was a warning that led to a downtrend, hasn't broken the 3C downtrend at all in this recent move up.

As far as today possibly being a churning day, that's exactly what the intraday 3C chart shows as well as price/volume action.

A new high on a strong candle and volume (follow through) may swing my opinion here, but as of now, this looks a lot like a shakeout move.