Looking to see oil continue to fall this week...Can we get as low as the 68s? I dont think so... more about 69/ 70 level maybe. Well see... ignore the news... it's just a chart.
USO trade ideas
USO: The most politically charged ETF USO has my attention.
Hi USO, How are you?
If you know my trading style, you know I am a quant trader and I am now in the process of developing a working model of USO. But while USO and I get acquainted, intimately ;), I wanted to speak philosophically about the idea of an ETF based on oil and just about the energy sector as a whole.
I had frequently posted in XOM and one thing I had noticed was that XOM finally was able to break out of essentially a 7 to 8 ish year downtrend. The oil based energy sector as a whole has seen this kind of prolonged downtrend, with USO being no different, as evidenced by this monthly candlestick chart. At its zenith, USO was trading slightly over $950.
It has only been hemorrhaging money since its peak, as has all oil based energy companies. In fact, it has been a terrible ETF that causes investors to slowly ooze their money and not stably grow their investments as with any other ETF. In fact, energy and oil has been trading inversely that of green energy stocks. For example, if we look at NextEra energy (NYSE: NEE) below, we will see, as oil and energy stocks decline, NEE increased:
Green energy ETFs are kind of novel and haven't been around long enough to truly compare with USO, but they have equally been performing terribly. Let's take a look at some.
Here is ICLN, a green energy ETF
You will notice here, that inverse relationship as pointed by the yellow arrow. As oil and non-renewable energy grows, green declines. And the inverse is true, as Oil prices declines, green energy rises.
So what gives?
This is where the philosophically/politically charged nature of these ETFs come in. Which is better? Dirty, antiquated, polluting oil stocks? Or clean, natural resource intensive and toxic byproduct producing green energy like solar and wind?
In all honesty, I truly believe it comes down to politics. Oil and "dirty" energy producing stocks fell out of fashion with the pro-enviornment movement and emphasis on renewable energy sources. This has led to an under performance of oil stocks (in my opinion) and an over-performance of green energy stocks.
In this great correction we are seeing in 2022, what we are in fact witnessing is the rightful correction of stocks back to natural states. Oil does not deserve to be at this price, IMO. No matter where you stand on the dirty vs clean energy debate, oil continues to be pivotal for society.
Green energy is equally pivotal. We need both. We cannot rely completely on one source of energy.
I believe we are seeing a massive correction in both industries where these stocks are returning to their rightful price. I do believe oil will continue to rise. We need pull backs of course, we can't just go straight up, but the fact is, oil remains a pivotal part of society.
Green energy is also pivotal and I believe that once we see stabilization in these stocks, we hopefully can understand that both industries are pivotal for societal and economic growth.
Sadly, both green energy and oil stocks have been tarnished by politics. Politics has a funny habit of ruining things. From the times of the liberal free 80s and 90s where anything went and, who really cares?! To now, where everything must be categorized, studied, labelled and discussed, from our personal identities and now to our investment choices.
But I still hold out hope for USO! And also for clean energy. I have avoided investing in either or (with the exception of XOM) because of the political stigma's surrounding them and the fact that those stigmas have translated to unnatural growth and decline. But I see things are turning around and I will be the first to jump on that band wagon to re-join!
Disclaimer!
Not investment advice!
I am PRO green energy, even in the process of buying an electric car (which I understand really are not environmentally friendly haha); but I recognize the need for both energy sources and investment in both fields!
Top Reached on US OILFollowing my previous Idea of the big bearish Harmonic Cypher on US OIL, we continue.
#Price action Analysis
If we analyze price action, we can see on USO on left, on green boxes on before days you needed 20m shares to move the price about 4% up. Yesterday, USO traded 30m shares to move the price nowhere, Wyckoff simple offer/demand, if you push a rock 4%, and later you needed a lot more force to move the same rock 0%, means that someone is pushing the rock from the other side really hard right? The same happens here. Offer/Demand.
On the right we have a candlestick pattern where the red candle takes over the green one from yesterday, that's a reversal pattern.
#Long price term Analysis
if you followed my before days chart, I put a bearish Cypher with a target near this area, we come from 0 from Covid FUD to 126 without a major correction, not a simple .386 Fibonacci retracement at all.
I think if you jumped to oil just because everyone is buying, you will get rekt probably, I expect a .386 retracement to 100-80s at least, in the following weeks/months.
What will happen next?
I think after the pullback to 80-100s this might continue to test an ATH break maybe, I am not sure, but a correction is more than needed at these prices at this point on the trend.
Short $USO?I know no one thinks oil is going to go lower after the run we've been having and the fact that there's a shortage of oil supply due to the conflict with Russia/Ukraine, but the chart is telling me a different story.
I don't know what could cause a pullback, but I could see $USO falling back the $56-62 support levels sometime over the next few weeks before continuing higher. Definitely a high-risk trade and I'm playing it through options... let's see how it plays out.
Will the Oil Boom Last? Watch the US / Saudi relationshipHow long will the oil boom last? How much of an impact will Russian isolation have on the oil market and overall inflation? Biden has been cool to the Saudi's since he took office, after Trump cultivated an unusually close relationship with them. Unlike Biden, Trump seemed to have a predatory view of oil prices. I mean, he would do whatever it took to keep gas cheap.
The longer this debacle (and its aftermath) goes on in Ukraine the more opportunity and incentive the US will have to tank the oil market. With such a large portion of GDP made up of oil, Russia is very susceptible to a deflationary spiral in oil cost. To a certain extent, oil is financing Russia's military operation since the more trouble they cause, the more their primary export is worth. While the initial inclination of the US is to isolate Russia and its oil sales this move may benefit Russia to some extent, since supply in the world will be lower they'll still likely be able to make deals to move their oil through neutral countries. However, the more this bites at the American inflation problem, the more pressure there will be to increase output. Most of the incentives will run toward increasing output; Russia will hurt more if its primary export drastically decreases in value, and the move will alleviate some inflation in western countries. After all, who will even remember why Biden has shunned the Saudis? When gas is $5+ will you cry about Yemen, especially if you can get cheaper gas and hurt Russia at the same time? Will you think of Khashoggi if it helps Ukraine? Your moral scruples will be intact and gas can be cheaper! And wtf the Climate? Who cares. That is the political calculus of the next 2 years.
When you see Washington getting closer to the Saudis then be skeptical of oil prices. They can really make Russia pay this way. Of course, domestic producers have been betrayed so much over the past decade that they won't just come back online; they'll need assurances.
Also, just for 'fun', here are some more predictions (more like possibilities):
- Without a critical mass Belarussian forces joining, Russia will not take Kyiv and the government will remain intact, but will hold the majority of the eastern country.
- Even if Russia can take Kyiv on it's own, it will take so long that it will undermine its bargaining position and be a strategic (at least politically) defeat.
- Trump will at least make a statement about offering to 'broker' a peace of some sort. No one will accept.
- Inflation will get bad enough that the Biden admin will treat with the Saudi's and try to smooth over their bad relationship in order to convince them to put pressure on oil prices.
- The US will contemplate how they can engender the same resistance morale in Taiwan and there will be talk of resurrecting something like the TPP (Obama era) in order to provide a coalition to oppose China economically.
USOThought this was going to blow right through the 1.618 extension/blue uptrend line when I saw oil last night. Looks like these resistance levels might hold after all. Bearish below $67.
OIL Loves WarNot much on this one, just looking at USO in its downward channel . Seems like we may get some interesting reactions in the next few years regarding countries that are too heavily invested in oil to keep the price up. First up Russia. Next USA.
Gold vs offshore oil rigs2022 february best assimetric bet, because ofshore oil compangie can t finance themselves,
USO Bearish CrabUS Oil Bearish Crab pattern on the daily.
Strong volume might push it to test the SL level soon.
USO and oil companiesOne of the bullish trends in this market has been energy and oil companies. Still USO has a lot of work to get back to what it was trading before 2020. The market right now is unsure what it wants to do but oil sure does want to push higher. Looking at next target of 69.2 then 74. Some good trading and option trading companies are XOM, CVX, and OXY. All looking for the next target up.
Trade Idea: USO July 15th 2 x 72/62 Put Ratio SpreadWTI is the highest it's been in a very long time ... . You can naturally play /CL directly or use USO Here, I would buy 2 x the 72's in July and sell the 62, with the result being a break even where the stock is currently trading. I would go longer-dated in this particular case to allow shale to get back in the game, U.S. production to increase somewhat toward pre-pandemic levels, and stockpiles to build.
Metrics:
Max Loss: 19.91 ($1991)
Max Profit: 62.09 ($6209) (That assumes that the underlying could go to zero, which it naturally won't)
Break Even: 62.05 relative to today's closing price of 61.68
Delta/Theta: -88.19/-1.57
$USO Looks toppyUSO trade idea - start building short as USO has followed the channel and appears to have topped.
Measured move would be towards bottom of channel now.
Stop loss near previous highs.
I like this idea because while many names are currently down and hard to short in the hole, USO appears to have just started rolling over. Technical indicators are pointing to sell signals as well.
Let's see !
USO bearish reversal (pitchfork analysis)USO reached multiple top pitchfork lines and is likely to start falling.
UnitedStates Oil Fund Strength This continued upward channel is showing signs of real strength here, id like to see what plan takes place here. a break of the channel to the north and well be heading back to 1k in the long term in my opinion.
USO, 10 Jan. Is the Oil price about to crash?Oil has completed a 5-wave move on 25 Oct. Oscillators and geometry suggest a decline.
Geometry:
Price got rejected at the lower boundary of the channel. The red trend line is a second resistance, connecting the previous low and the gap.
Elliott:
We can count an ABC (in green), which makes up corrective wave (b), in blue. If correct, we can expect a wave C to the downside.
Oscillators:
The RSI shows a strong bearish divergence. The MFI points downwards. Stochastic is overbought and due to retrace.
Correlation:
USO is -.74 inversely correlated with TLT, at support, and .71 with XLE, at resistance.
How to trade it:
The idea is to build short exposure between 57 and 60. The red and blue trend lines give us two excellent risk-reward ratios. If price continues towards 60 it is likely to form an expanding flat correction. The idea is invalidated if USO establishes support above 56.
US OIL analysisUS oil can make a bearish swing as its shows weakness at its long-term resistance here labeled as R1.
The overall structure is a bearish Gartley pattern.
This can be a risky setup as the overall structure of DXY is bearish in the mid and long term.
The last time we traded USO...
USO (US Oil ETF) - Support, Resistance, Trendlines - 2021USO (United States Oil Fund ETF) - 2020 to 2021 - Support, Resistance, Trendlines:
-Resistance Price Levels (colored horizontal lines above current price)
-Support Price Levels (colored horizontal lines below current price)
-Trendline Resistances (diagonal yellow lines above current price)
-Trendline Supports (diagonal yellow lines below current price)
note: chart is on log scale.
$USO IronCondor 72%PoP, 45% profit - gift of the day with 176IVRDon't miss the opportunity of the day!
Highest IVR ETF today with the value of 173!
Of course, -5 delta meaning bearish Iron Condor.
SAFETY ZONES: 200MA could act as support, bullish trendline too.
Max profit: $314
Probability of 50%Profit: 72%
Profit Target relative to my Buying Power: 45%
Max loss with my risk management: ~$150
Req. Buy Power: $686 (max loss without management before expiry, no way to let this happen!)
Tasty IVR: 137-173 (ultra high for options )
Expiry: 56 days
SETUP : IC for , because IVR ultra high, for 3.14cr
* Sell 1 USO Jan21' 35 Put
* Buy 1 USO Jan21' 45 Put
* Buy 1 USO Jan21' 55 Call
* Sell 1 USO Jan21' 65 Call
SETUP: IC for USO, because IVR is epic high.
Stop/my risk management : Closing immediately if daily candle is closing out of the the box, max loss in my calculations in this case could be ~150$.
Take profit strategy: 65% of max.profit in this case with auto buy order at 1.1db.
Of course I'll not wait until expiry in any case!
If you liked this article, check my other ideas.
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Oil Could Slippery Below 46.18 (USO)Traders have a great opportunity for shorts or even a long if 46.18 holds. Either way, that level is in play.
$USO oversold with potential bounce comingOil closed its 3rd consecutive day underneath the Buy Sell Band with a hammer candle pattern on almost triple average volume signalling a potential bottom. RSI(7) is also in an oversold state with a 21 handle and the price is 13% below it's 50 day MA. Both the Range Strength(20) and Hurst Exponent(100) are signalling the market is in a ranging mean reversion mode, which makes for a high probability entry signal for a trade back to the 50 day MA.
Nice strong pullback in USO, supporting at ema 200Currently, we are seeing the ema 200 holding strongly. With the new variant detected, we might see further drop if price is unable to clear above 52-54 level in the coming weeks.
The trend is still a strong upward trend. It is a good buy and hold area, but expect volatility in the upcoming few weeks.
