United States Oil (USO) – Trump has tasked Mnuchin with developing a plan to revive the industry

United States Oil (USO) – Trump has tasked Mnuchin with developing a plan to revive the industry

United States Oil (USO) – Trump has tasked Mnuchin with developing a plan to revive the industry

U.S. Treasury Secretary Steven Mnuchin weighed in on how he may work to rescue the energy industry hammered by the fallout from the coronavirus, which may include the government taking stakes in certain companies.

TickerSecurityLastChangeChange %
USOUNITED STATES OIL FUND L.P.2.57-0.07-2.65%

“The President has asked me to work with the Secretary of Energy and we’re looking at a whole of bunch of alternatives it would be premature to comment on any one of them,” said Mnuchin on Friday. “You can assume that is one of the alternatives but there’s many of them” he added in a response to a reporter’s question at the White House.

Shayne Heffernan Trade Idea

“Anybody who has had length who doesn’t have storage contracts has either closed their positions (in June) or rolled far forward … because it’s suicide to carry a position into the close after seeing what happened last month.”  Shayne Heffernan PhD in Economics

Why This Matters

We’re seeing historic volatility in the oil market.

Oil futures collapsed on Monday and Tuesday, then surged Wednesday and Thursday. As I write Friday morning, they’re up 3%.

Despite the attempted rebound, prices are still existentially-low for the overwhelming majority of U.S. oil companies.

What this means is bankruptcies are coming … and potentially, an avalanche of them.

But that means incredible opportunities are coming too. The chance to double or triple your money — or far more — as oil rebounds and select companies survive.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 6.11.

The projected upper bound is: 3.89.

The projected lower bound is: 0.92.

The projected closing price is: 2.41.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 1 white candles and 8 black candles for a net of 7 black candles. During the past 50 bars, there have been 20 white candles and 29 black candles for a net of 9 black candles.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 13.6442. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 16 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 24.74. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 15 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -118.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 12 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 3 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.070 at 2.570. Volume was 99% below average (consolidating) and Bollinger Bands were 32% wider than normal.

Open      High       Low        Close         Volume
2.690     2.730      2.510      2.570         1,125,678
Technical Outlook
Short Term:        Oversold
Intermediate Term: Bearish
Long Term:         Bearish
Moving Averages: 10-period        50-period         200-period
Close:           3.69             6.64              10.49
Volatility:      167              163               91
Volume:          366,479,552      152,892,352       57,041,496

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

UNTD ST OIL FUND is currently 75.5% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods.

There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect moderate flows of volume out of USO (mildly bearish). Our trend forecasting oscillators are currently bearish on USO and have had this outlook for the last 70 periods. Our momentum oscillator is currently indicating that USO is currently in an oversold condition.

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