Thursday, April 2, 2015

[USO] update [PBR]

In the backlink I modeled USO cycling lower.  Here was my top level model at that time:

Based on recent chart data, the model is modified slightly but the overall intent remains the same.  I expect a bottom in the $14 range.  This would quickly change if the small DDT that just formed gets broken out of to the upside but I think the odds are low on that front.  Still, stranger things have happened so that would be my trigger for turning bullish on USO again.

Because of this I would be wary about holding PBR.  I modeled a major bottom for it within pennies of the actual bottom in this post so the coming dip might be a failed 5th that uses 5 waves down to form an inclining double bottom or it might find a slightly lower low less likely but still possible IMO).  This bears watching closely as the current wave could finish up, and then do a small a-b-c into 4 and then head higher.  If that happens it would cinch the bull case that I originally made.   After a long downdraft, however, followed by 3 waves up to the level of the prior 4th, I get suspicious.  If you bought in the $5 range then you are up smartly here so the goal is to not give it back.  Look for a peak to sell into (like the one happening now...) and then patiently await the next pullback (even if it goes higher first) to see how it looks.  If a simple a-b-c to the 38.2, buy in again but with tight stops to sell on a lower low

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