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USO

May 10 Market Update | Technical, Fundamental, NewsDescription: A simplified analysis for the week ahead. Points of Interest: $2965 Low-Volume Area; Targets $2940, $3015; VWAP Feb ‘20 High, Mar ‘20 Low, and Dec ‘18 Low. Technical: Broad market indices, such as the Nasdaq (/NQ), have shown relative strength, trending higher and experiencing muted liquidations. The Russell (/RTY) took back the Volume Weighted Average Price (VWAP) anchored from the Feb ‘20 high, which also corresponds to its 50% fibonacci retracement level. Above current prices is a low-volume area which developed when participants had solid downside directional conviction. The short term strategy is to fade (short resistance, long support). When you trade into an area of low-volume, then sentiment (directional conviction) has changed and movement is swift. In case of the S&P 500, acceptance above Friday’s late-day spike may point to the subsequent penetration of the low-volume area and swift movement to $3015, the other end of that area. Spending minimal time above Friday’s spike base and high would point to rotation back into the high volume area we are attempting to leave. These high-volume areas are sticky, since they develop when prices slow to satisfy two-sided, rotational trade. Last week I said that if the market reverses and overtakes the initiative activity that created the gap, then sentiment has changed. Well, we reversed. Despite the market moving higher on Tuesday, participants did not have enough conviction to follow through. We left behind a thick area of value and an intraday poor high before selling-off on the Fed Clarida doom and gloom news. Excess was established lower, during the overnight session. The type of selling that occured on Tuesday was not accompanied by new money, left value behind, and offered a good opportunity to sell puts or establish some low-risk long positions. On Wednesday, we sold off again, leaving mechanical looking highs. When the following day retraced that selling, the context was there for repair of Tuesday’s high. All this put together, the most important note to be made is Friday’s continuation higher on terrible economic news. If the fundamental context is crap and we go higher, I’m not going to be bearish. In case of upside, targets include $2940 and $3015. On a continuation lower, targets include $2860, $2820, and $2786, the convergence of significant references. Scroll to bottom of document for non-profile charts. Fundamental: Key Events: CPI; Initial Claims; Retail Sales; Industrial Production; UoM Confidence; Inventories; Producer Prices; Import Prices; Earnings. Moody’s projects retail and apparel spec grade default rate to surge. bit.ly European automakers restart production. Demand pickup remains questionable. bit.ly Shell dividend cut good for credit, but highlights downturn severity. bit.ly ISM non-manufacturing index falls as prices rise on increased shipping costs. bit.ly Market priced in negative U.S. interest rates. reut.rs Second phase of reopening to see turnover and employment impact. reut.rs China is not complying with the Phase 1 trade deal. bit.ly Borrowing plummeted as consumers pulled back credit card use. bit.ly Mortgage forbearance requests plateau. bit.ly Virus shock to reduce some banks’ capital, increase credit vulnerability. bit.ly Industrial Metals Price Index suggests downturn will lack GFC severity. bit.ly Mortgage applications from homebuyers show an improving trend. bit.ly Treasury to issuer longer-dated debt to finance growing deficit. on.mktw.net Sentiment: 23.7% Bullish, 23.7% Neutral, 52.7% Bearish as of 5/9/2020. bit.ly Gamma Exposure: (Trending Higher) 3,754,598,011 as of 5/9/2020. bit.ly Dark Pool Index: (Trending Lower) 44.1% as of 5/9/2020. bit.ly Product Analysis: /ES: AMEX:SPY TVC:SPX /NQ: NASDAQ:QQQ TVC:NDX /RTY: AMEX:IWM TVC:RUT /YM: AMEX:DIA DJCFD:DJI $NYA: TVC:NYA /GC: AMEX:GLD /CL: AMEX:USO AMEX:DBO AMEX:USL /NG: AMEX:UNG /ZB: NASDAQ:TLT Disclaimer: This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve, especially me. In no way should this post be construed as investment advice.
CME_MINI:ES1!
by Physik
USO Bullish: Long 12mos - 24mos Volatile Stock - Invest Smarty!AMEX:USO The U.S. largest oil fund has come under fire as of late. USO’s recent actions to cushion the blow from a historic sell-off in oil markets hit by oversupply and a coronavirus-induced plunge in fuel demand have brought about doubt if the fund can still meet its investment objective of reflecting the spot prices of oil. The fund has been trying to mitigate potential losses from falling crude prices by spreading its holdings through contracts expiring in July, August and September. USO said, "The inability to closely track the benchmark oil futures contract, the changes in its portfolio of investments and the impact of higher levels of contango, will impact the performance of USO and the value of its shares." Many investors have bailed on USO as they understood more about contango. A Seeking Alpha article that described the perils of the futures roll when longer-dated contracts are more expensive than near-term ones. Understanding this motivated many investors to find exposure to oil futures that don’t expire anytime soon such as the United States 12 Month Oil Fund LP (USL), which contains further-out contracts or Invesco DB Oil Fund (DBO). Taking into account everything that has occurred over the last few weeks, USO's stock has slightly climbed after executing its reverse split and as oil prices are recovering. You must recognize that the USO fund managers are in survival mode right now and doing everything they can to keep the ETF afloat. USO’s portfolio was moved away from the front-month contracts, which they did ahead of everybody else. As the world continues to battle the COVID pandemic, social distance restrictions are beginning to loosen. However, the recovery for oil will be slow. Oil traders believe it’s likely to take more than a year, and perhaps much longer, before global demand reaches the pre-pandemic levels of roughly 100 million barrels a day. But our world is still heavily reliant on fossil fuels as it is the world's primary energy source. Oil is the world's primary fuel source for transportation and the United States is the world's leader in petroleum consumption. So as the U.S.'s transportation activities recover, so will the USO ETF. My chart analysis sees the stock hitting $32 by January 2021 and expecting to trade above $60 by 2022. I obtained positions in USO when in the stock bottomed out prior to the reverse split and possess several long options at $1.50 & $2.50 calls ($12/$20 with reverse split conversions) that set to expire in 2022. Be effective and trade smartly my friends! I am not a financial advisor. The advice here given is not financial advice even though my excitement might make it look like such. Trade at your own risk and remember nobody can guarantee you results. I conduct analysis and make informed decisions on what I believe is right and at the end of the day, I am just a person, not an expert. Again, this is my belief, a belief of an ordinary man, who just works hard and enjoys the pleasures of swing trading personally. Darell
AMEX:USOLong
by mykonchince
May 3 Market Update | Technical, Fundamental, NewsDescription: An analysis for the week ahead. Points of Interest: 4/29 Rejection; 2780 Gap; 5/1 Split b-Shape Profile. Technical: Other broad market indices, such as the Nasdaq have shown extreme relative strength in the weeks prior, with the /NQ spending a significant amount of time building value above it’s 61.8% retracement, a bullish sign. Indices such as the NYSE Composite paint a picture of relative weakness. On the last two days of April, the S&P 500 failed to break into a low-volume area, a space that often serves as strong resistance or support. Wednesday trade seemed a tad excessive, putting in a p-shape profile on higher volume, a sign of strong long-side participation and short-covering. Technically, the market ended its advance from the March 23 low, as signaled by the failed break higher from last-week’s balance zone (more in last week’s post) and Friday’s gap open. Friday’s gap (a signal that we’re out of balance) was formed by larger players that perceived value away from price. The right move at the open was to wait since many gaps are filled in morning trade. Obviously, responsive participants failed to close the gap and the market continued lower to a high-volume area. Friday’s b-shaped, multi-distribution profile points to liquidation of old longs and emotional participation. Additionally, the profile is split and rounded at the bottom (i.e., market got too short). Since the market is too short, I’d expect some sort of quick snap higher, up to the low-volume split (i.e., resistance) or 2860. The low is a structure that will most likely be repaired in subsequent sessions. The broad market appears ripe for a pullback. In case of upside, target is 2860. On a continuation lower, targets include 2787 (convergence of significant references), 2633 (top of prior-balance), and 2566 (half of the 3/23-4/29 advance). If the market reverses and overtakes the initiative activity that created the gap, then sentiment has changed. Scroll to bottom of document for non-profile charts. Fundamental: Key Events: April Employment; ISM Non Manufacturing; ADP Employment; Trade Data; Earnings. Overwriter flows to cut volatility; if gamma flips long, then speculate with cheap calls. bit.ly If the market slips into short gamma, then it’s possible to get another push lower. bit.ly Yield volatility further muted due to success of Fed action. bloom.bg Investor confidence high despite lower sentiment amongst business owners. bit.ly Alongside soaring cloud usage, new contracts from bigger clients drop-off. reut.rs U.S. threatens tariffs on China over virus outbreak. reut.rs Sprint lost 350K phone subscribers last quarter. reut.rs Britain hires Morgan Stanley for help on its aviation rescue plan. reut.rs Fed, ECB, BoJ hone in on improved lending, bond-buying. bit.ly Main Street Lending program improves access to “bottomless supply of cheap capital” (bit.ly). ECB cut rates and introduced new facilities to ensure financing of the real economy. bloom.bg Gold and natural gas to benefit in the face of economic weakness. bit.ly Increased bond issuance will come alongside massive future downgrades. bit.ly Even after the reopening, the economy will be “shackled to only 25-50%” (bit.ly). Fed action has diminishing returns; “I fear the effects will be short-lived” (bit.ly). Despite the downturn, startups are hiring and raising funds. bit.ly U.S. tells Saudi Arabia to cut oil supply or lose military support. reut.rs OPEC+ cuts for May, June total 9.7 million barrels per day ($USO, $USL, $DBO). tmsnrt.rs Boeing ($BA) and Embraer ($ERJ) deal scrapped, freeing up cash. bit.ly Auto loan extensions to slow note payments, increase borrower distress. bit.ly China reforms for small banks lowers risk from coronavirus disruption. bit.ly Great Migration: Coronavirus to cause shifts in population density. bit.ly Sentiment: 30.6% Bullish, 25.4% Neutral, 44.0% Bearish as of 5/1/2020 (bit.ly). Gamma Exposure: (Trending Lower) 721,282,138 as of 5/1/2020 (bit.ly). Dark Pool Index: (Trending Higher) 48.3% as of 5/1/2020 (bit.ly). Index Analysis: $SPX: TVC:SPX $NDX: TVC:NDX $RUT: TVC:RUT $DJI: TVC:DJI $NYA: TVC:NYA $UKX: TVC:UKX $NI225: TVC:NI225 $HSI: TVC:HSI Futures Analysis: /GC: AMEX:GLD /CL: AMEX:USO AMEX:DBO AMEX:USL /NG: AMEX:UNG /ZB: NASDAQ:TLT Disclaimer: This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve, especially me. In no way should this post be construed as investment advice.
CME_MINI:ES1!
by Physik
Red alert: Idiots are selling! [Entertainment & lesson]We have a code red. I repeat, we have a code red. I can barely breathe! 🤣 I'm crying After USO had their reverse split, the price gapped up. You can check it on robintrack, first there was a strong decline which might be all the people so wiped out they could only afford <8 shares (LOL), but then even after this it keeps going down! robintrack.net It only went up before you can check for yourself. Since february they have only kept buying, the number of holders line never went down even for a day no matter what. And now even after the initial drop that might be explained for other reasons number of holders went down by ~7% There is only 1 explanation: These masterminds thought the price really went up, and they outsmarted institutions, and have locked up profit 😆 Now I don't know if Robinhood had an erronous display, or if they only show the gains since the split maybe (so investors saw green and thought they got their money back), perhaps some are doing "automated trading"? All I know is the price rallied up because of a reverse split and a group of people known to be stupid and have been strictly buying for 2 months without even 1 day of pause, have started selling. These can't be humans... They must be... something else... Hey so if a really solid company made a 1 > 10 split all the animals would be aggressively buying thinking the price dropped 90%? Making money in markets isn't that hard if you take it seriously, just look what kind of absolute imbeciles we are playing against!
AMEX:USOEducation
by MrRenev
14
Surely USO can't go to $0... RIGHT???The title was at least my reasoning on the trade... On April 20th, as the big news was that Oil was quickly becoming "free" I wanted to participate in this once-in-a-lifetime opportunity. My preferred instrument to trade oil has always been USO as it is an equity, optionable, and highly liquid. At the time USO was trading at 3.8. I decided to sell the 2.5 June Put Options as my trade. I reasoned that such a big fund as USO "could not go to $0" and I was OK with owning it at 2.5. I might have to wait but people are eventually going to burn off all this oil and need more in the future. On April 21st, a day after my trade, a headline read "OIL, One Of The Largest Oil ETNs, Will Be Shut Down And Liquidated". Wow, so oil ETNs *CAN* stop trading and go to $0. The next day April 22nd, USO announced that it would be doing a reverse 1-to-8 split. This would severely complicate my trade were I to receive fractional options and/or shares. Annoying. Overall I am not all that worried about the prospects of this trade. I was actually given a bit of a lucky reprieve in that when I took the trade my initial order only got a partial fill. As my remaining order sat there outstanding I decided to just close the rest of it. This momentary decision of general risk aversion fortuitously kept me small; small enough to be able to sit back as an intrigued participant rather than a nervous stake holder. As Carl Icahn said last week as he became the counterparty to the negative oil futures delivery this is a "once in-a-lifetime bargain". I think despite the FUD he is right. Despite the unique pressures of current events our modern civilization's thirst for energy has not fundamentally changed for the long term.
AMEX:USOLong
by norok
April 26 Market Update | Technical, Fundamental, NewsDescription: An analysis for the week ahead. Points of Interest: 2730-2845 Balance Zone; Targets 2930, 2630; CBOE:VIX at 36. Technical: Nasdaq leading to the upside, with a complete retracement of Thursday’s news-driven sell-off. Market is balancing, leveraging time to correct, rather than price. Composite profile (2/19-4/24) POC at 50% retracement. Additionally, YTD VWAP lies nearby, a clue to why prices are so rotational here. Read more about VWAP here: bit.ly Despite terrible news, the market held up fairly well. On 4/17, /ES met it’s measured move, piercing into an area of low volume which served as resistance. Market quickly liquidated to the 2730 area and was not met with new selling. Instead, in subsequent trading, prices and value shifted higher, above the 50% retracement. Aside from remaining in balance, the market could extend directionally, or extend and return to balance quickly. Taking out 2730, downside target at 2630, a low volume area that could serve as support. Breaking above 2845, also an area of low volume on the composite profile, target 2930. Scroll to bottom of document for non-profile charts. Fundamental: Key Events: Central Bank Meetings; Initial Claims, Earnings; GDP; Home Sales; PCE; Consumer Confidence; Personal Income; Construction Spending; Vehicle Sales; ISM Manufacturing. Who’s Winning: Remote Work (e.g., Zoom, Slack, Microsoft, Facebook), Cloud (e.g., Amazon AWS, Microsoft Azure), Telemedicine (bit.ly). Tickers: NASDAQ:ZM , NYSE:WORK , NASDAQ:MSFT , NASDAQ:AMZN Who’s Losing: Software (e.g., Google Chrome), Video Games (e.g., Sony), Hardware, Camera (e.g., GoPro), Manufacturing (e.g., Boeing, Ford, GM, U.S. Steel), and more (bit.ly). TICKERS: NYSE:SNE , NASDAQ:GPRO , NYSE:F , NYSE:GM , NYSE:X Gamma Trap: Despite terrible news, major market indices ended the week practically unchanged. This comes as SPX 2,800 emerges as the neutral gamma zone. A close above $2813 SPX would “push dealer gamma in the green, creating a feedback loop whereby higher prices result in even higher prices as dealers are forced to chase the market higher” (bit.ly). TICKERS: AMEX:SPY , TVC:SPX The Bear’s Case: “In view of how the equity market was recently up by 25.6% from its March 23 low, it should be mentioned that during the equity market’s long trek to its March 2009 trough, at one point (on January 6, 2009 to be exact) the equity market was up by an even greater 26.3% from its then low of November 20, 2008. As it turned out, the U.S, equity market sank by 27.3% from January 6, 2009’s misleading high to March 9, 2009’s bottom. Thus, even a 26% jump by the equity market from a bottom does not necessarily obviate the impending formation of an even lower trough.” Read More Here: bit.ly The Bull’s Case: "The market is loudly saying the Fed Bazooka worked to turn the tide, and risk assets are going higher.” (bit.ly). "If this bear market was much shorter than other , it’s because the speed and magnitude of Fed actions." "Negative data is the reality around market bottoms. If this rally continues, the negative data will become less bad on the margin over the next several months. In 2009, the market started rallying in March and the non-farm payrolls report didn’t turn positive until November." "If the Fed has successfully started to reflate the economy as many assets suggest, the bond market will need to confirm this trend." "If bond yields don’t start moving higher in the next 4 weeks, this would be a major signal that the reflation trade is not working." Crisis Averted: In New York, the risk of hospital overflowings was never realized and states are showing a genuine interest in getting back to work. "The scenes in Michigan and elsewhere show genuine hunger to resume working." "Wuhan gives us clear evidence that things can reopen within 90 days. Again, this is much better than the worst scenarios." Read More Here: bit.ly Oil: Dislocations within physical markets remain, a negative for short-term price volatility and the spread between WTI and Brent. Adding, “US crude prices below $30/barrel (bbl) in the second quarter of 2020, and oil prices beneath the cash cost of production will lead US oil and gas producers to keep announcing deep cuts in capital spending. Such spending cuts will accelerate the decline in US oil production in 2020 and into 2021,” a downside for oil prices in 2020, even with the expected decline in supply (bit.ly). Moody’s Energy Downgrades: bit.ly Citi on the ‘New World of Petroleum’: citi.us Short puts in /CL worth the risk? Check out the statistics here: bit.ly What Oil ETFs To Invest In (HINT: Avoid $USO): bit.ly TICKERS: $CL1!, $DBO, $USL /CL To /GC: “Realistically, a dramatic breakdown in the gold market (which might actually present as a super-spike) can’t be viewed as highly likely. But then again, an infectious disease epidemic wasn’t included in most 2020 pricing models either, nor was negative-priced crude. While it may not seem likely, one can see how a dislocation in the gold market, one starving for physical gold, could result in a strong, unexpected rally—the exact opposite of what has occurred in a flooded crude oil market.” Read more here: bit.ly TICKER: $GC1!, $GLD Steel: “The U.S. steel industry has fallen into its most severe downturn since the 2008 financial crisis. United States Steel Corp., ArcelorMittal and other steelmakers are ratcheting back output and shedding workers, anticipating that orders and prices will fall further” (bit.ly). Trade: “There were high hopes that China's commitment to $200 billion of increased spending on U.S. agriculture, energy, manufacturing and services as part of the ‘phase one’ trade deal would help make farmers whole. But as the virus outbreak rattled Chinese demand, those planned purchases evaporated” (bit.ly). Treasury Run: Expectation for a sustained rise in Treasuries (mostly longer-dated maturities) remains as economic rebound expectations become more delayed (bit.ly). Yields: “An unfolding global recession will rein in Treasury bond yields. As long as the global economy operates below trend, the 10-year Treasury yield may not remain above 1.25% for long. Until COVID-19 risks fade, substantially wider credit spreads are possible” (bit.ly). Bond Credit: COVID-19 to strain sovereign and bank credit quality in Europe, a negative for covered bond credit. On the other hand, “covered bonds will continue to benefit from systemic support amid the coronavirus disruptions - as occurred during previous crises - which will help support overall credit quality” (bit.ly). Earnings: Boeing, Apple, Alphabet, Facebook, Exxon, Chevron to post slowdowns or losses in certain categories. Microsoft, Spotify, Qualcomm and Amazon earnings likely to show gains in certain categories. Read More Here: tmsnrt.rs TICKERS: NYSE:BA , NASDAQ:AAPL , NASDAQ:GOOGL , NASDAQ:FB , NYSE:XOM , NYSE:CVX Unemployment: True number of people unemployed between 32-70 million people (i.e., 20-45% unemployment rate), according to Axios (bit.ly). Liquidity: Desire to assure adequate liquidity during has prompted a temporary surge by IG bond offerings (bit.ly). Typically, alongside a rise in corporate bond issuance comes the refinancing of “outstanding short-term debt, such as commercial paper, as long-term fixed-rate bonds in order to eliminate the risk of not being able to roll-over very short-dated credit market instruments. Once the recession subsides and the return of profits growth is visible, the imperative to buttress liquidity fades and IG bond issuance sinks as was the case during the 12-months-ended June 2010.” Rescue Package: House approved a $480 billion coronavirus rescue package that provides aid to SMEs and hospitals. Additionally, the bill will provide a $320 billion infusion for the Paycheck Protection Program (PPP) which ran out of money last week. Read More Here: politi.co Check Out Moody’s PPP Breakdown Here: bit.ly Hubei: The epicentre of the coronavirus outbreak had its economy shrink by 40%, the largest drop for any province since the founding of the People’s Republic of China in 1949. Consumer Sentiment: “Morning Consult finds respondents are showing increasing optimism about the future, as the number of people who say they expect to be worse off in a year has consistently declined,” since sentiment hit a low April 7 (bit.ly). Money Market Flows: “A record $4.65 trillion is now held in money market funds. That's around $700 billion more than the peak level seen during the 2007–2009 global financial crisis” (bit.ly). Farming: U.S. family farmers filed 595 bankruptcies in 2019, up from 498 filings in 2018 (reut.rs). Adding, the USDA announced a $19B support program for farmers and ranchers, helping soften the blow to demand for many agricultural commodities (bit.ly). Moreover, the two prior pieces of news come alongside the closing of major meat plants across the United States, which may net higher meat prices in the long-term (bit.ly). Note: “The Farm Credit System is also strongly capitalized, a credit positive, in the event that its credit costs rise materially” (bit.ly). TICKERS: AMEX:DBA Startup Funding: Crunchbase projects $34.5 billion was invested in North American startups in Q1 2020, up 2% year over year. The increase is attributable to late-stage venture funding. Read Here: bit.ly Sentiment: 24.9% Bullish, 25.1% Neutral, 50.0% Bearish as of 4/25/2020 (bit.ly). Gamma Exposure: (Trending Lower) 1,264,910,712 as of 4/25/2020 (bit.ly). Dark Pool Index: (Trending Lower) 44% as of 4/25/2020 (bit.ly). Index Analysis: $SPX: TVC:SPX $NDX: TVC:NDX $RUT: TVC:RUT $DJI: TVC:DJI $NYA: TVC:NYA $UKX: TVC:UKX $NI225: TVC:NI225 $HSI: TVC:HSI Futures Analysis: /GC: AMEX:GLD /CL: AMEX:USO AMEX:DBO NASDAQ:USLV /NG: AMEX:UNG /ZB: NASDAQ:TLT Disclaimer: This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve, especially me. In no way should this post be construed as investment advice.
CME_MINI:ES1!
by Physik