Oil's Long Side Rocked

Terrible inventory data (much more than expected) has rocked the long side of crude oil this AM and the U.S. Oil Fund ETF (NYSE:  USO).  The price structure has pressed beneath its RISING 50 DMA at $66.29 into the low $63.50 area so far, and could be heading for a test of its 4 month support line, now at $61.30. Although today's action certainly has the fundamental catalyst to continue lower, let's be aware that the prior correction from the June highs above $73.00 into the July 13th low at $58.32 represents a completed MAJOR CORRECTION.

With that in mind, I am mindful of the upleg from the corrective low at $58.32 (7/13) to recovery rally peak at $68.99 (7/27). Today's weakness has plunged prices to $64.00, which just happens to be the exact 50% retracement support plateau of the July upleg ($63 represents the 62% retrace level). If oil prices hold between $64 and $63 on a closing basis, then I have to consider that this weakness is a "minor, but violent" correction of the July upleg, OR part of a larger, developing WIDE sideways, contracting range that has considerably more time, and directional swings ahead prior to either a new downleg OR a new bull move. MJP 7/29/09 11:30 AM ET ($63.35)