Forces of Deflation Remain Strong as Oil Gives Back Gains - Wow, the US Oil Fund ETF (NYSE: USO) gave back all its gains from earlier this morning, which means the USO declined nearly 7% since its pre-opening up-gap. What this tells us (perhaps) is that Mid-East hostilities and saber rattling or not, it is unlikely that the crude oil complex will put in a "V" bottom.

Instead, today's profile argues that the forces of deflation remain powerful, and that geopolitical events remain a secondary force -- not the primary one. If that proves to be the case, it tells me two things: 1) that we still need to "take trades" in the USO (take profits on significant near-term moves), and 2) that a non-"V" bottom likely will be carved out, which means we should expect a multi-week trading range between 32.00 and 27.50 to form prior to a sustained recovery bull move.

By Mike Paulenoff

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com) , a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of Exchange Traded Funds (ETFs) that track equity indices, metals, energy commodities, currencies, Treasuries, and other markets. It is for traders with a 3-30 day time horizon, who use the service for guidance on both specific trades as well as general market direction

© 2002-2008 MPTrader.com, an AdviceTrade publication. All rights reserved. Any publication, distribution, retransmission or reproduction of information or data contained on this Web site without written consent from MPTrader is prohibited. See our disclaimer.

Mike Paulenoff Archive

Comments

clay
31 Dec 08, 08:26

crude oil

I covered my dxo short (2.50) at 1.98 and reversed went long. Dropped next day to 1.78 (gulp), but closed up at 2.05. Covered short yesterday at 2.32 (high 2.38) and trying a short scalp today, if it breaks yesterdays low, I will stay short.

I have a project for you. I have DTO; DXO ERY; ERX on my monitor. DTO very thinly traded will go the opposite way or lead the next turn in trend. Check this out a five minute graph. yesterday DTO was strong +$6 but the Bulls were soft until the last hour of trading, DTO travled down, but still closed +positive while the Bull etfs closed near their highs. I have been using DTO as a clue to reverse my position. Check it out. Looks like the War isnt going to do it, until Israel bombs Iran. Israel is looking for any provoocation and this Hamas thing may be the start with the USA saying Do It.. Why not .. we already have hour troops there in Iraq.

Clay

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.