NRGU and USO/SPY correlatesIntermarket analysis of Oil ETF relative to SPX. This graph works because oil moves based on inflation, economy, commodities etc. Some of these spots were almost "risk free" (until proven otherwise). Meaning 100% - until something changes.
Where are we now? USO needs to find support - and then we see.
NRGU
MRO US Oil LongThe US Energy Department has announced open bids for oil contracts to replenish the
national strategic reserve which was depleted during the prior run up on global oil prices.
This is a sure sign that the feds think that spot oil has but in a bottom especially in the context
of shipping disruptions and higher insurance costs due to terrorism /piracy in the area of the
Red Sea and Suez Canal. In the meanwhile two South American countries are having sovereignty
disputes over oil fields and the British Navy is offshore to buttress the interests of Guyana.
MRO is a domestic oil producer that is independent of Middle East issues. Its oil is consumed
mostly in the US with a little shipping to Asia only. On the 50 minute chart, price downtrended
from January 3th through and then below the high volume area of the volume profile.
Price has reversed back up and reapproached the evolving high volume area. The dual TF
MACD ( by Chris Moody) shows moving average divergence. Chris Moody's dual TF RSI indicator
shows the faster TF RSI rising over the slower TF RSI as a sign of bullish momentum.
I have taken both a stock and call options position in MRO having zoomed into the 15 minute
TF for a good entry. Given the level of challenges current geopolitics presents to
smooth flowing and inexpensive shipping of crude oil, I am expectant of significant gains
in these positions. I have also looked into a position in OXY and CVE, which is a Canadian
crude producer.
NRGD - bullishNRGD price reached a support level and its RSI reached a support ptichfork line. Expecting it to go up tomorrow.
bullish NRGU (OIL) based on pitchfork analysisNRGU reached support pitchfork lines both on daily and weekly and is likely to bounce up.
NRGD a 3X Leveraged ETF that shorts oilNRGD goes up when oil goes down; this ETF tracks the oil futures ; it is leveraged and managed.
Here on the one-hour chart with an Bollinger Bands and EMA bands indicator added, it can be
seen that price had been trending down in two waves beginning June 1st , Upon dropping
outside the BB lower line, price reversed upward to reach the upper BB line and reversed again.
Finally, price dropped outside the BB lower line and reversed this past Thursday. The RSI
oscillator has recently trended between 65 and 40, suggesting healthy price action without
and oversold or overbought conditions. As it is now trending up again. I see it as suitable for a l
long trade. I have plotted horizontal resistance lines in order to plan a tiered exit from a trade
of 4 shares where I will partially close the position by selling a share each time price reaches
one of those lines. At the same time, I will move the stop loss up to midway between its l
location and that line. I will repeat this until all shares are sold. I am expecting a 12% profit
overall for a week-long trade. This will be a free trade without risk after the first move of the
stop loss to above the entry point. If the RSI remains below 80, I may let the last share run
until I am alerted that price has hit the BB upper line by an alert or alternatively set up
a trailing stop loss of 2%.