Hubert Senters here.
Let’s take a look at a question from a viewer. This one comes from Clyde which is on aweber list.
We have two, three e-mail list. This one’s aweber one. What are your thoughts on USO? If you’re not interested, what would have to happen in the future to make you interested? Yeah, I’m interested. So unfortunately like a lot of products on Wall Street they change the rules on you on this one.
So USO used to trade the front month of crude, the now, after it started getting smoked to the down side decouple from the front month. And they’re doing it a bunch of different months so let’s take a look at that really quick.
So what we’re looking at here is a snapshot of Crude on a daily chart and as you can see it’s sold off, bounced up and is selling off again. Now, if we compare that to USO, USO is going lower as Crude is going lower too. But it’s not a perfect one. The one like it used to be because about a week and a half or two weeks ago they decoupled from the front month of Crude.
What would make me interested? I’m interested in Crude oil down here and USO. I don’t think it’s going to stay down here forever. I think it’s a decent trade. The issue is with timing. What I’m doing is I’m just doing a trailing one close above the high of the low bar which is right here.
This last week was my potential entry right there above. That was the little bar so I would say hey, I would go long above $3.38. Now, this is the low bar so I’m just watching it go lower and then what I’m doing here is I’m going to say okay, if it goes lower tomorrow then this would be my entry.
If it goes lower today is low, this is the low bar. The high of the low bar it sounds confusing it’s really not. This is the low bar the high of that low bar would be $2.29. I need a close above $2.29. So in other words in the next day we come in here and it trades like this it goes up like that, that would be a close above $2.29. That would make me interested in USO. I would also do the exact same trade in Crude oil. I would trade them technically. I wouldn’t worry about them being decoupled. I would just trade the price action and trade them purely technically.
Good luck. Hope it helps. See you on the next video.
Hubert.
