Energy / Oil

XOM ( already a core short - long term) position is looking really good, I think it has a little more time, but I don't think very much at all.

USO actually ended the day looking great to me, I don't really care that much about intraday price movement as I do about seeing continued confirmation or said another way, continuing to see what I suspected.

XLE is probably a position I'm better off not taking because of the correlation (USO puts and the position split with DTO long, one for the juice and one for the possible trend) although correlation in this market is basically down to two categories-"Risk on" or "Risk off", but I still cover it for members. ERY is a leveraged way to play XLE short with an equity (ETF) rather than options.

The difference between USO (WTI-West Texas Intermediary crude) and the Energy sector like XLE is that crude is just 1 form, there are many such as nat gas, coal, there are services like drilling, exploring, transportation, it's an entire industry vs a single type of energy.

So here's what we have, DTO and USO remain open.

USO

 This is the hourly chart, the divergences here are some of the most significant of any most timeframes, it takes quite a bit of underlying action (accumulation or distribution) to make it to charts this long.

The white area is of course accumulation which as almost always (98% of the time) is either in to lower prices, or a flat/range bound area), accumulation is almost never what retail thinks when they see price jump and volume expand, they think that's smart money accumulating-NO, they were in long before retail even though about the asset.

There's some distribution coming out of that area, the first peak is not distribution, it would be the second and that is where it starts, remember the other thing retails gets wrong is in assuming that institutional money can just move in and out of positions like we can-it can take them months and in some cases like home-builders around 2000, more than a year.

At the yellow areas I'm pointing out there is no significant accumulation in USO at either area so a lot of USO's gains have been because of conflict in the MENA region, not driven by institutional investment.

 The 30 min chart confirms the same as above which is important.

So does the 15 min chart so at this point we may not have a multi-year trend ready to unfold, but this should sponsor a significant move to the downside.

Starting now from the earliest charts and meeting in the middle, the 1 min chart  shows price/trend confirmation to the far left as 3C should move with price, then price moves up and 3C down, that's distribution and if you look at the period, it's very similar to the 30/60 min charts, this is excellent confirmation.

Here's the intraday chart on a close up today...

 First we have a relative (large relative) divergence (even though leading divergences are stronger), this is a large relative. Look at price and 3C and their relationship to each other to the far left, then in the middle price moves up significantly for this timeframe, but 3C refuses to make a higher high, that typically means there's money coming out as price moves up, then we have a 3rd high near the close at the same level and 3C is leading negative to the downside.

In fact CL (Light Sweet Crude FUTURES) did nearly the exact same thing as USO.

9:30 to 16:00 is the New York normal hours, note the leading negative divergence at the same area as USO to the far right late today.

That is excellent confirmation between an ETF in multiple timeframes and Crude futures themselves.

 USO 2 min is showing the same, the very last move today in price and 3C is the worst of the series.

 The 3 min trend, again similar to the 1 min trend (divergence) as well as the 30 and 60, while shorter timeframes have more details, they all agree on distribution starting in the same area, excellent confirmation.


And the 5 min chart meets us in the middle with the longer term (trend) charts, again there's a very obvious and sharp leading negative divergence at the highs near the close today.

As far an XLE or Energy goes, I'm not convinced on the timing yet, but to give you an example of perhaps the kind of trend we'd be looking to trade, see if anything sticks out on this chart of XLE/ 3C

XLE 15 min Trend