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Category Archives: USO

USO “C” Wave Bull Market Review

This is more about looking back to see the “C” wave bull market that the majority of us missed. If we use $9 as our average entry price then the $14 price level would be a great exit point. Selling at the $14.50 price level is next to impossiable, as you have to be a real contrarian to sell when all the experts are beating the bullish drums.

Once I multiplied $9 by 1.618 it pointed to a $14.56 price level where USO reversed its trend. Of course the experts are still looking for much higher oil prices when they keep calling this a “correction”.  If you read any analsyts slightest suggestion of a correction, you know that those analysts have no idea that USO is just in a bear market rally.

This “C” wave  is one move in Minor degree, which works perfectly with a 61% gain. It also measures the length of a one degree move.

Not too many experienced traders can stay in a position to ride up a 5 wave sequence in any degree, especially if you are trying to trade oil units in the Forex accounts. Every time this chart dips panic ensues as analysts drum up the bearish news. Stops get hit and when that happens the markets can leave without you.

Trying to hit a 5 wave run before it starts is the key as these 5 wave runs is what the EWP is all about. Bear market rallies may not make any sense if we don’t understand that bear market rallies can be huge and even many years long. With any bear market rally there are “No” support levels to consider as we always have to ask, “Support for what?”.  Any expression about a bear market rally in Elliott Wave terms, means complete retracement of the entire bullish phase. Any return to its bearish phase USO must travel well below the $9 price level, but then we would also be getting close to where any inverse stock split can happen. The reversals I look for are the ones that force all the players going in one direction, to switch and then go in the opposite direction.

Last week I initiated a small USO short position which turned green the following day. I prefer trading ETFs but my US funds are limited so in this case I can only take a very small token short position.

If we look closley at this USO peak we can see that a “Gap” has opened, which I think it will stay open for a few years.

Having one gap indicator already is a big plus, as we know that in the future that this gap will get closed. The only problem is that USO combines several other futures contracts which distorts wave counts and produces the slippage between contracts.

I do not give investment advice but I do like to speculate. If the holders of USO can’t escape a bull trap then they are going to get hit hard, and eventullay will be forced out. Very few trading or investment accounts in the world can handle any drawdown from $14 back to $9 which works out to the same as $13 down to $8 would. In other words a 61% crash sure can chop up any trading account, in very short order.

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USO United States Oil Fund Review

This USO Oil fund is not something you want to invest in. Even speculating in it will just frusturate you due to the slippage in the charts. About the only thing USO is good for is to short when all the bulls are confinced oil is going to the moon. The 5 1/2 year sideways market does not reflect the futures market one bit, even though I entertained the idea of a triangle in oil futures as well.  This is a very popular fund so many players are going to suffer huge losses if they don’t get out.

It contains not just WTI crude oil but contains heating oil futures, gasoline futures and even natural gas futures, so I can understand why this USO fund does not track oil with any consistancy.

Even the rally after the 2017 bottom was very weak, compared to what the oil futures did do. The entire move from the 2016 bottom looks like an inverted zigzag, which in Elliott wave speak means a bear market rally.  All USO ever has to do is fall to a new record lows, which will confirm that our present rally has indeed been a bear market rally.

In this case it’s an Intermediate degree bear market rally, which also gives us the clue that the next huge bull market will be at least one degree higher.  Two degrees higher and we would be looking at a Cycle degree bull move!

My records show that USO has not recorded an inverse stock split, but it is something that may happen if USO ever approaches the $5-7 price level.

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