Crude Oil Funds & Gas Funds

USO is the non-leveraged fund that matches the oil index. OIH is the non-leveraged fund that tracks the Oil Services sector. UCO and DIG are the double funds. UCO tracks the Oil index and DIG tracks the Oil and Gas stocks. UGA is the fund that tracks Gasoline while UNG tracks the natural gas index.

The two double Bear Crude Oil Funds are DUG and SCO. DUG tracks the Oil and Gas while SCO is solely Oil.

Below under “Comments, Analysis, and Recommendations”, I will write my comments for the Crude Oil Funds giving you my chart analysis. I want to give you good evidence as to why I believe the Crude Oil Funds are heading higher or lower. I base my analysis on several technical tools. I use Exponential Moving Averages, Elliott Wave Analysis, Fibonacci, Japanese Candlestick patterns, trend lines, and support/resistance lines.

My goal is to provide you with the information needed so you can make the best trading decisions. My goal is also to help you to become profitable and most of all to help keep you from loosing a ton of money. I will provide you the potential price targets to take profits and stop loss levels to help preserve your trading capital.

Click on the desired Crude Oil Funds link below to view the chart.

DIG DUG OIH SCO UCO UGA UNG USO

Comments, Analysis, and Recommendations

The Crude Oil Funds had a volatile day today. Look at USO’s chart. Yes, the fund closed higher than the previous day’s close and traded higher intraday than the previous day. That is good, right? A closer look using Japanese Candlestick charting will cause concern.

The close was well below 50% of the day’s trading range. The body of today’s candle is inside yesterday’s candle. This would be a Bullish Harami if the pattern had appeared near a bottom. However, since it appeared near a high, it concerns me.

The price did come close to the 76.4% Fibonacci retracement level. This tells us that if the price is going to head lower, it has to do so soon. I expect lower lows and a break above the 1/7/10 high will cause me to re-evaluate the wave count. If my count is correct, the price should start heading down very soon.

The first sign that the next leg down is underway will be a fall below the 3/1/10 low. A strong confirmation will be a clear five-wave move to the downside. Waiting on a five-wave pattern should keep us out of trouble.

Be a smart trader!

Craig Wells

The Crude Oil Funds have been guilty in the past for tight trading ranges. That has not been the case since November of 2009. There are steep moves in both directions for several months now and can cause confusion and doubt of the ultimate direction of the price.

The corrective process from the 2/5/10 low looks complete. However, the strong push up today causes some doubt. Yesterday’s high will be critical for the Elliott Wave interpretation. The best confirmation that the correction is over and the next leg down has started, is a five-wave move to the downside.

Be a smart trader!

Craig Wells

Oil has had a nice bounce off the 2/5/10 low. The wave pattern is somewhat overlapping indicating that the move is corrective. One thing to notice is the degree of the correction. USO has retraced almost 78.6% of the move from the 2/3/10 high. The pattern so far looks like a triple zig-zag, matching what is happening in the Major Index Funds. It look like the corrective pattern may be complete are nearly so during this afternoon’s trading.

The critical resistance is not far off from current prices. The 2/3/10 high is critical to the Elliott Wave count I have for USO. The critical support for an indication that the next leg down is resuming is today’s low. A drop below the 2/5/10 low will confirm the next leg down is underway.

OIH and UGA have similar patterns and the above comments are duplicated in these funds. USO has had a stronger rebound with UGA having the weakest. OIH has just reached the 61.8% retracement while UGA has only reached the 50% retracement.

One more thing to watch for is a break of a trend line. You can connect the lows since the 2/5/10 bottom and you have a defined trend line. The first clue that the next leg down has started will be a break below that trend line.

Be a smart trader.

Craig Wells

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