USO Consolidation Buying - MAY Break-out
Updated
After shorting USO, I have now turned my sentiment around and am LONG on this ETF. Let me explain as I'm sure many people here would question my position.
1) The bottom I believe has been reached as we are seeing strong support in the $2.40-2.50s range. On Friday 24th, I saw extremely large blocks of USO being acquired - these were Hedge Funds buying.
2) The CME forced USO to change its Futures structure to go out several more months, stating they could not hold the majority of Futures for the 2 primary months out. Now why would they do that exactly? Because they know the market is going to turn around very soon in Oil Futures, and because someone was buying in, hmmm.
3) I saw an article on Friday evening stating that the TRUMP Admin will start buying Oil Futures and Securities in May to boost the price of Oil, also they are considering tariffs on Imported Oil coming, if production was not eased globally. This would be huge for the O&G industry, and I can tell you, that the FED is not going to let Saudi & Russia put 10's of millions of O&G jobs out.
4) Saudi and Russia already started lowering production in Oil, a full week before May, like they said they would. Also, another indication of what's coming.
5) New Shares restricted, and Reverse split. I actually, see these 2 things as positive for USO. For obvious reasons, they will be taking shares out of the market, and as Crude starts to climb its way back to the 30's, the Bulls will be buying in.
So, to conclude. I believe getting in before May 1 would be a great entry point, and riding it up until OIL gets back into the 30's would be the strategy. At that point, I will take another glance at everything and see where we're at, at that point. GL everyone.
JP - OUT
1) The bottom I believe has been reached as we are seeing strong support in the $2.40-2.50s range. On Friday 24th, I saw extremely large blocks of USO being acquired - these were Hedge Funds buying.
2) The CME forced USO to change its Futures structure to go out several more months, stating they could not hold the majority of Futures for the 2 primary months out. Now why would they do that exactly? Because they know the market is going to turn around very soon in Oil Futures, and because someone was buying in, hmmm.
3) I saw an article on Friday evening stating that the TRUMP Admin will start buying Oil Futures and Securities in May to boost the price of Oil, also they are considering tariffs on Imported Oil coming, if production was not eased globally. This would be huge for the O&G industry, and I can tell you, that the FED is not going to let Saudi & Russia put 10's of millions of O&G jobs out.
4) Saudi and Russia already started lowering production in Oil, a full week before May, like they said they would. Also, another indication of what's coming.
5) New Shares restricted, and Reverse split. I actually, see these 2 things as positive for USO. For obvious reasons, they will be taking shares out of the market, and as Crude starts to climb its way back to the 30's, the Bulls will be buying in.
So, to conclude. I believe getting in before May 1 would be a great entry point, and riding it up until OIL gets back into the 30's would be the strategy. At that point, I will take another glance at everything and see where we're at, at that point. GL everyone.
JP - OUT
Note
Over the weekend, the Trump deal seemed to have (3). Now they are saying instead of buying Futures, they will go another route. I guess they figured out, that bailing the actual companies themselves would be the better method and less costly. The oil market may shift downward due to this. I am changing my outlook to Neutral now.
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