While this is exactly what we were looking for in spirit, in yesterday's follow up, USO Follow Up... I had also said,
"I don't mind saying that this is a bit of a head scratcher for me and I don't have all the answers, I wish I did, but looking at options for different trades and risk management should help clear things up and present some scenarios that may fit your goals or perhaps you'll find they are not in line with your goals.
Sure enough, this morning's EIA Petroleum report came in at a build of 8.43mm barrels for the week above consensus of 8mm on the nose, yet crude is higher right now. Our stop run/head fake level was hit, although not hit as I expected, but my expectations really don't matter much beyond the fact that the expectation of a head fake move occurred as expected, how it happened are details that are just my opinion, not based on objective evidence.
As proposed in last night's Daily Wrap, the EIA report this morning may come in at a miss and give us our cash market head fake move below $18, the area I suggested you set price alerts at. While this doesn't look like the typical head fake, which tend to be stronger looking moves as different traders have different risk tolerances and they generally want to run them all out before a reversal, which means the head fake moves are extreme and believable, it is a head fake move in the form of a stop run and right at the psychological level of $18 as proposed
My opinion has been this is a counter trend rally setting up, but we are now seeing signals that are approaching large enough to be a viable bottom in USO for a primary or Intermediate uprtrend, to be precise, we are not there yet in my view and would likely have to come down a bit to recent lows to build out the base, but that doesn't mean we can't have a counter trend rally and then a pullback and finish building a broader base that can move higher as a trend change.
So if I were considering Crude and I think I will put USO long in the tracking portfolio today, I'd decide on which trend I'm looking to trade and if it's the larger one, I might be a little more patient or phase in to a position, if it's a counter trend rally then I'd just have some stops below today's intraday low.
For now, I'm putting a half size position in USO long in the tracking portfolio as a trade on the counter trend rally. If you are thinking of a longer term trend trade and a real bottom, I'd urge some patience, while bottoms are almost always tighter than tops, I still don't see this as large enough to support an intermediate or primary uptrend.".
I'm more than willing to add to USO and bring it up to a full size position, but looking at the charts for USO, whatever is going on, whether that larger true base is being built or this is just a blip that passes, I'm not ready to add that second half, I'm also not concerned about holding the first half. When I see something that looks like an answer as this head fake move/stop run clearly bothered me yesterday as it was in my opinion, too small, I'll have it out immediately.
The important charts in the 2+ hour range still look fantastic,
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