Correction for Oil - Market Analysis for Dec 6th, 2011

Monday's high at 102.44 in NYMEX nearby crude oil has the right look of a failed attempt to climb to new multi-month highs above 103.37. It also exhibits 4-hour negative momentum divergences that argue the powerful upmove off of the October 4 low at 75.95 is exhausted and in need of a correction that presses the price structure towards a test of the Oct-Dec up-trendline, now at 99.00.

Of course, geopolitical headlines and event-risk remain a potential powder-keg issue for crude oil prices. However, that aside, my work argues for a press to 99.00. If that level is violated, then expect 96.70/30 prior to my anticipation of another unplug that will propel prices to new recovery highs projected into the 105-108 target zone.

ETF traders should watch the U.S. Oil Fund ETF (USO) and the ProShares UltraShort DJ-UBS Crude Oil (SCO).