USO Update and F_E_D Minutes

Interestingly this morning we had the F_E_D's Dudley out seemingly trying to manage expectations for the soon to be released F_E_D minutes from the last F_O_M_C meeting. The comments about essentially not reading too much in to the weak March Payrolls and it being weather related are interesting because once again, the F_E_D in addition to having created a yard stick by which they can conduct policy according to what they "Feel" or "Think" will happen rather than actual data, pairs well with his comments and reinforces my view that the F_E_D is indeed desperate to tighten as soon as possible or practical, why else be apologetic for the March Payrolls massive miss?

I'm sure there's way more beyond coincidence that's going on that we'll never understand, but once again just before the minutes, a F_E_D member is managing expectations and telling us to essentially ignore the weak payrolls data just as they have ignored the deteriorating macro data for so long that they could no longer retain credibility in any form without making the "SLIGHTEST" of adjustments to the policy statement at the last meeting acknowledging some of the recent "softness" in the economy. I'll have more to say on this later, but the important take away is that I don't believe any organnization/corporation or even small business makes a move that is as large as the F_E_D's rate hike (relative to their respective businesses) without a lot of planning. I don't think it's a spur of the moment, "We'll decide at some meeting", I think the decision has been made long ago and I've offered the proof since 2013 that they were moving in this direction, now QE3, which was open  ended is over. There's much more than meets the eye here and things that seem trivial or coincidental rarely are in the market, especially in central banking.

*As usual I'll be in radio silence during the Minutes to watch the market reaction, some of the best data we get.

As for USO/Crude, the DOE's EIA inventories saw a build not too far off API's estimate last night at 10.95 mn barrels. This is the 13th consecutive weekly build which is a new record, it is the largest build since March of  2001, Goldman estimates that there's only about 10% of storage capacity left at the Cushing facility and oil production ticked up on top of this morning's Saudi news that they'll increase production!

It's little wonder someone knew something and thus the reason the 3C charts which were confirming near term USO price action suddenly failed this week leading to USO updates as there was finally something new to report. This is yesterday's noon-ish update, USO Update the first update since March 31st as 3C had been confirming price action and thus there was no edge.

Yesterday's update argued for the expected pullback to move lower in to the base area we are still technically in and finish it up, although we'll confirm on a pullback that accumulation has started again in to lower prices suggesting a primary trend reversal to the upside on a longer trend basis.

 USO 5 min, note the gap, I have a feeling we will head to that before moving lower in which case, I may close the partial long USO position at a slight gain.

 USO 15 min has seen a deeper divegrence today since yesterday

 The 5 min chart is not that bad right now, you did see the earlier CL Futures chart this morning, I have little doubt we head down, but a gap fill sounds reasonable first, which opens the door to a couple different trade opportunities.

 And the 1 min chart is already showing an intraday positive divegrence, this argues for the probability of a gap fill.

The 2 min chart is starting to show migration.

The gap fill is where we would want to take a look at positions.