Oil Study

Looking at this sequence of the USO chart shows us some tradeable information.  First off the weekly is showing us a huge range, and within it, a smaller secondary range.  The two daily charts show, one a successful test of the secondary range last week, and zooming closer in we see a series of higher lows on price and stochastics, and a nice gap just above price.

My play is this, I opened a 25 option Sept 33 call position on the open on Friday, plan is to sell or scale out on the gap fill.  Then I will watch for a successful move above the next fib line or a failure of the range low for my next move with USO.

Market Sniper pointed out a trader post on playing ranges yesterday, and looking back at the weekly you can see a failure of the smaller range gives a high probability of a test to the 09 lows.

One mistake in my chart, the smaller range is the 10 lows, not the 09 lows, sorry.

Oil- can you say deflation?

Nice Bounce on IOC.

IOC looks like a nice bounce on the channel, and up and over the 13 and 65 EMA's.  Let's see if it just settles or continues to run.

SNP Looks Weak

China Petroleum and Chemical Corp., China's state owned oil and chemical company is really struggling, and the chart is showing the pressure.  China's input costs are surging, thanks to their insistence on pegging their currency to ours.  Their reasoning is to maintain export competitiveness with us, alas there is no free lunch however and their raw material prices are soaring, but the Chinese government cannot allow these prices to flow through dollar for dollar (or yuan for yuan) so the margin pressure is building.  I think the chart is reflecting that compression.  It has filled that gap, now awaiting further weakness to enter short.

I want to point out some other weak stocks (no time to place the charts now), SMG, GOD, NEM, and BVN.  However TNH and FTI are looking interesting as long candidates.