The bounce we have been looking for in Crude on a $USD correction lower is here and it's quite parabolic. It's actually a bit hard not to take action immediately with the USO put position we were hoping to enter on such a move.
However I always want as much confirmation as I can get and I don't know that 1-day of Crude bouncing is all that we should expect until I have good confirmation from the charts showing strong distribution in to the bounce. There are some interesting correlations and some that are simply over-run at the moment.
USO making a reversal process the last 2-days much like the $USD with a small Harami reversal as of yesterday (inside day) on this daily chart and today's move so far at +3.39% on no news beyond yesterday's inventories.
Note the inverse correlation between Crude (candlesticks) and the $USDX (purple) on a daily chart.
Here's the same on a 5 min chart, crude is outperforming the correlation as is plain to see today.
On the other hand ES/SPX futures seem to have no correlation of any meaning on this 4 hour chart vs crude.
However on a 1 min chart, the correlation isn't great as of yesterday, but when looking at today...
ES 1 min vs Crude, running hand in hand, although the relative performance is much different.
It's interesting to note that small caps/Russell 2000/IWM are looking MUCH Different.
In any case I'll be looking for signs in the $USD that it is slowing its downside corruption and that $USO is seeing distribution in size, then I'd feel much more comfortable with an entry once we have objective evidence in hand rather than best guesses.
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