Crude is moving well this morning. The $USO is up 3% after opening the new year with a gap lower open.
Highlights: The $USO is working on only its second weekly gain over the last 13 weeks. This steep decline has traced out an ugly bear channel. It may soon give way. When channels of this degree of steepness end, either up or down, the reaction move is usually quite strong.
$USO is working in a divergent low(Daily MACD).
At last week’s low the $USO was down 43% from the October high taking out the 2017 and 2016 lows in the process.
The $USO has a very solid support zone in place. The $9.90 to $9.50 area should be considered a low risk buy zone. A close back below $9.00 would indicate the three month bear channel remains intact.
At time of publication we are long $USO in some managed accounts.