Introducing Rick Ducat to analyze the US Oil Fund (USO) hitting a six-year high, clarifying this is about the fund (closely correlated to oil prices) not futures, and asking how it compares to the broader energy sector.
Market on Close Host
Rick Ducat
USO and oil-based products are skyrocketing. Extreme highs in oil are more disorderly and severe than lows due to supply/demand shocks. The situation is very uncertain and dicey; it's not over yet.
Acknowledges the situation isn't over, then asks Ducat to walk through the technical setup of USO, noting the almost vertical move to the upside.
Market on Close Host
Rick Ducat
Oil is non-substitutable, making highs more extreme and difficult to make sense of than lows. Provides key price levels (today's high: 109.98, low: 104.53, previous high: 98.83, gap: 91.59, consolidation high: 81) as potential guidelines for trades.
Rick Ducat
Moving averages are irrelevant as price has moved too fast; they need to catch up. RSI is at ~89.3, showing very strong upside momentum. Watch for momentum slowdown if RSI crosses below 70 or shows bearish divergence.
Rick Ducat
Volume profile isn't helpful for current price due to rapid movement, but past heavy volume was around 79-80. Recent volume spikes for seven sessions show high conviction.
Asks if there is notable options action and if the 'sizzle' (activity metric) is elevated.
Market on Close Host
Rick Ducat
Price is at 6-7 standard deviations from the linear regression line, which is very uncommon. Levels at ~106.71 and ~111.85 could be considered for a potential pullback.
Rick Ducat
For March 20th expiration (14 days out), the market is still pricing almost a 20% move, so volatility is not over. The 'sizzle' is 3.12 (3x the 5-day average). Very large opening trades for April and March calls occurred, netting multi-million dollar debits.