Saturday, May 9, 2009

Oil remains on the move up - charts of USO and WTIC

The charts showing oil continuing to point up are working well, so here's a look. The first charts below are my daily charts of USO and $WTIC. Remember that the USO chart is "heavier" than WTIC, since USO bottomed in late February where WTIC made what might be a truncated low. Therefore the levels for a retracement of .382 and the 200-day moving average are higher for USO, than in the WTIC chart. My thought is that crude oil (and WTIC) getting to $65 may be time to TMAR (take money and run) on part of the position, and tighten stops on the rest; or just tighten stops - that's an individual decision of course. Crude oil at $65 would be just above the first .382 retracement on WTIC. But it's possible for oil to get to higher levels, so I cannot see a bearish (short) case for oil anytime real soon, especially with the indicators looking positive on the weekly charts (and much improvement on the monthly charts). Tony Caldaro's daily and weekly charts for WTIC are also below, and it's evident he is looking for higher levels in his Objective Elliott Wave method.

The part of this scenario that still concerns me is the monthly chart, where I've marked WTIC's monthly chart with channel trendlines. You can see that oil may have a resistance level when it gets to a kissback level of the lower trendline that it had broken under. The indicators on the monthly chart have obviously improved, but cannot be perceived as marking a new bull market compared to a bear market rally. So to quote one analyst I like to read (who was actually speaking about the equities markets when he wrote this a few days ago), I'm "dancing close to the door." Meaning, I'm going along with this rally, but will be ready to exit (at least partially, maybe fully depending on how it looks) whenever the music may stop playing.







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