There is no question in my mind that the USO has been the most difficult chart I have dealt with in 2017. The overlapping structures have not presented much in the way of a solid wave structure.
But, the one thing that has been quite instructive has been the MACD on the 144-minute chart. Each time the MACD has struck the upper line on the chart, we have pulled back. And, each time we have struck the bottom line, we have rallied. This has been the story for almost all of 2017.
So, when we finally break the lower support line on the MACD, I am going to expect it will suggest that a larger degree pullback is in progress.
This past week, the USO broke below the upper price support we noted last week at 11.30. But, the market has not provided evidence of a larger break down just yet. For now, we seem to be holding the lower support on the MACD, and price has bounced. While it is certainly still possible that the USO is going to stretch for that 12.50 region we have been citing as a potential target since we broke out at the end of October, I cannot say I have a pattern which makes me confident that we will indeed strike levels that high.
For now, I view this chart as attempting to top out, and provide us a larger degree pullback. For this reason, I have noted that I had been selling the positions I own in the complex into this rally, and will buy them back as we go down below the 10.60 region. And, again, the only way I will consider going overweight the complex is if the USO can drop down to that lower blue box in early 2018. Until then, I will likely use the next pullback to buy back the positions I have recently sold, without going overweight the complex until the bigger drop to the blue box is seen. But, I still think this complex has the potential to be one of the leaders of the overall equity market in 2018.