Crude Oil USO Analysis

Folks, I am seeing the smart money selling strength ie distribution on the USO chart. I have been stocking crude oil and think we are very close to a blow off top. BTW, I have been selling the new highs as you can see there is a pattern here. That is the play, sell the new high then buy the dip. But I expect that the next dip will not be bought and then the floor will drop out..........to much selling on the dips. I know some others think crude oil is strong cuz its at an all time high and its going higher to 120 but no one wanted to buy over 111 today and you have to respect that.


http://stockcharts.c...7078&r=9784.png

Edited by hedgehawk, 13 March 2008 - 09:36 PM.

http://bigcharts.mar...&mocktick=1.gif

Don't short STRONG stocks. There's a pattern of higher highs here on higher volume on both the hourly and daily. Sure, it can pullback to 85 and test, but that's not what happened today, it pulled back on lighter volume. As I said when you inquired last nite, if you want to do your fib extension work for a daytrade... fine. This thing is not ready yet, and you or no one else knows where it's going to top.

Strong is relative, everyone knows theres 10 - 20 of speculation in the 110 price. The reward is there. It is the risk management that is key here. I sell the new high by at least +$1 everytime I place my sell orders always at .10 less the new price point. So my next short goes in at 111.90 with a stop loss of .40 to .50. Generally it reaches the new price point, then pulls back as everyone sells the new milestone number. Once the play becomes in the money move the stop loss up to break even then walk it down. The ATR on the price movement is just as much down as up lately the chart shows that. It just takes twice as long for the price to move up as it does down. One of these scalps will end up being a runner, and that is my strategy, I am sticking to it and I guess I am just crazy like that. So shorting oil and its strength is no more risky than shorting any other stock as my losses are always limited to my stop loss point which is half a point. Also you know what feels really good, when you move that stop loss up to break even and you say to yourself, "anything can happen but I have zero risk." So actually being successful in shorting this oil for the big payday while avoiding the drawdown is more about risk management and managing the trades than picking the top.

Edited by hedgehawk, 13 March 2008 - 09:56 PM.

Crude oil does not trade like a stock. The USO is like a derrivative. It's like using volume on an option contract to track where a stock is going. It's all about the trading pit. CL and other commodities trade different than stocks. Right now they are trying to balance world demand/supply relationships by raising price to eliminate US demand. Eventually CL will break down and correct but who knows when.

If you have CNBC World, turn it on, they have a technical analyst on... I just emailed him on USO. And sorry Cirrus, Wyckoff analysis is more frequently used in commodities than stocks.

HH...do you hear yourself saying "everyone knows" ? and you trust that logic pronounced by your biased self? someone at this board has a signature that says something like: if you sense hope within your trade strategy, then close up shop and walk away from that trade idea.

Edited by hiker, 13 March 2008 - 10:16 PM.

"everyone" = public knowledge. Your right it does not matter what I think, it matters what the people on the sideline think. So let me ask you, would you or anyone else put new money to work on oil at 110 plus right now tomorrow or wait for a pull back?

CNBC T/A guy in Hong Kong says Support 108... 114-115 on contract target. Had a problem getting USO ETF up.

Dude that was awesome.

Ok I will move my stop loss up now to break even at 110.00 if I get stopped out I will reload at 111.90