It looks to me like its already bounced. Hard to see anything bullish when its making lower lows and lower highs, below all the moving averages, which are all sloping downward.
I’m basing my answer regarding USO on the weekly on two candles:
the most recent bullish reversal hammer candle which formed Dec 19
the very strong bullish candle which formed Oct 24 (with a weekly gain of +7.65%)
Looking at the whole picture for me the bottom has already been confirmed twice. Once with the low on April 11 and then with the higher low on Oct 24 (with a brief undercut retest of the low on Dec 19). To me the most likely scenario is that USO gaps up higher next week, or at least keeps trading above $67.
Also weather services so far describe this winter in New York as the most wintry in a few years. It’s the snowiest winter expected in about five years, with forecasts calling for ~25–35 inches for the season. A stronger winter in New York, with heavier snowfall and colder temperatures, increases demand for heating fuels like heating oil derived from crude and natural gas. This could potentially raise overall oil demand.
Roughly half a month later… Regarding my first comment from Dec. 27:
USO closed on Dec. 26 at $68.48 and yesterday (Jan. 13) the oil ETF closed at $73.48 - that's a gain of +7.3% since then. Now oil trades at a 2-month high and is up again in the pre-market.
Oil (USO) looks bullish to me. Might bounce higher next week(s).
It looks to me like its already bounced. Hard to see anything bullish when its making lower lows and lower highs, below all the moving averages, which are all sloping downward.
I’m basing my answer regarding USO on the weekly on two candles:
the most recent bullish reversal hammer candle which formed Dec 19
the very strong bullish candle which formed Oct 24 (with a weekly gain of +7.65%)
Looking at the whole picture for me the bottom has already been confirmed twice. Once with the low on April 11 and then with the higher low on Oct 24 (with a brief undercut retest of the low on Dec 19). To me the most likely scenario is that USO gaps up higher next week, or at least keeps trading above $67.
Also weather services so far describe this winter in New York as the most wintry in a few years. It’s the snowiest winter expected in about five years, with forecasts calling for ~25–35 inches for the season. A stronger winter in New York, with heavier snowfall and colder temperatures, increases demand for heating fuels like heating oil derived from crude and natural gas. This could potentially raise overall oil demand.
Got it. Thanks for adding your rationale. 👊
Here we go 😃
The USO oil ETF gapped up Monday higher by +2.0% and opened at 69.85.
Plus several oil stocks are gaining today, while the indices are all lower (these stocks are roughly sorted by relative volume):
Occidental Petroleum Corp (OXY) +1.2%
Exxon Mobil Corp (XOM) +1.3%
Valero Energy Corp (VLO) +1.5%
Devon Energy Corp (DVN) +1.5%
Diamondback Energy Inc (FANG) +1.6%
Expand Energy Corp (EXE) +1.8%
Nice call!
Roughly half a month later… Regarding my first comment from Dec. 27:
USO closed on Dec. 26 at $68.48 and yesterday (Jan. 13) the oil ETF closed at $73.48 - that's a gain of +7.3% since then. Now oil trades at a 2-month high and is up again in the pre-market.
https://substack.com/profile/369074133-stefan-schmidt/note/c-199688879
Thanks for the update Andy!