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Powerful Upmove in Oil


Today's bigger than expected drawdown in gasoline inventories despite the build in crude has sparked a powerful upmove in the US Oil Trust (AMEX: USO) in the aftermath of yesterday's weakness and today's lower open. Let's notice that today's action represents a potentially significant key upside reversal session, which would argue that the near-term direction has reversed to the upside (again). Let's also notice that a few times in the past seven sessions the USO has attempted, but failed to hurdle key resistance between 52.25 and 52.60. A confirmed key upside reversal today will argue strongly that the USO will claw its way above 52.25/60 on the way to confronting its 9-month resistance line at 53.55. Yes, I bailed out of my long position yesterday, but I am not yet ready to chase today's upside reversal ... at least until I get some confirmation that a new upleg is in progress.
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