USO Update

Earlier in the week we closed out our USO equity short, Closing USO Equity Short and USO P/L and Follow Up both of which why I thought it was a good time to take our USO equity short with no leverage off the table and protect a +15% gain. Don't forget to check out the reasons why if you don't already know.

This morning's EIA petroleum report came in at ANOTHER consecutive (2 weeks now) build in inventories, although not a big one at +384k bbl. The Cushing storage facility also saw a build, as well as gains in production. The reaction to this morning's oil inventories release...

 USO intraday with a decline at the EIA release this morning.

The daily chart is back inside and below the $19 level which means, it "can" start to finish the work that needs to be done to finish the base, but for now I suspect volatility first and likely a move down toward the bottom of the range. We may be able to get in some quick trades on the volatility headed toward the bottom on a potential oversold bounce soon.

That's the direction (oil bounce) we were headed in before this morning's EIA, but the pullback may actually help facilitate an oversold bounce which I'd prefer to play with options given the nature and R:R ratio of the move (profit potential being limited).

The leading negative USO divergence (red) that sent USO lower and the recent short term oversold condition developing with a positive divergence. That took a little bit of a hit today, but lower prices are usually where we see accumulation so it's very possible this sets up a USO oversold bounce trade. I don't see enough confirmation or reversal process yet, but I wanted to give you a head's up as it can build in quickly and if I put out a Trade Idea, I want you to have the back story so I can get it out quickly.

As usual I'll be looking for a strong leading positive divergence at least out to the 3 - 5 min chart, depending on how strong it is.