uso setup

I think we have a nice bear divergence setup comin in oil. Note the trading top back last November. A very similar setup now. I have been trading DUG for my short oil plays. I am close to entering again, am monitoring, need a bit more it looks like.

USO going over 100... Crude Contract 127...

USO ABC UP TARGET 100.64.

Oil has at least 6 more months to go up. USO at 100 is nothing. This commodity will not stop going up until US administration changes. Denleo

That chart reminds me... take a look at transports monthly chart. Very similar setup. Almost identical to 2000 top too.

Why would oil go down more than a few weeks? - World oil demand overall still rising and China growing 10%+ with nearly $2 trillion in cash to subsidize their oil consumption. - Supply of CL has been flat to slightly falling despite 2 year of record drilling. Moreover, even the overly optimistic IEA estimates world depletion rate at 4% minimum which means about 4 mbpd must be replaced to maintain production. - Alternatives aren't even close to being implemented (but they eventually will). - There is growing strong evidence that CL is being rationed by price worldwide. US has nothin' but debt while so many other rapidly growing nations have cold hard cash. - Unless China and a few other major economies experiencing tremendous CL demand growth plummet into a recession I see no reason the LT trend in CL will change. - I've seen guest after guest come on CNBC and call CL a bubble--one compared it to the internet bubble today. Real CL bulls are rare and this tells me two things: 1. Most don't own oil or energy or are underallocated 2. The trend is still up

Edited by Cirrus, 07 May 2008 - 02:33 PM.