By: Tom Gentile
on April 4th, 2023
Yesterday, OPEC+, which stands for Organization of the Petroleum Exporting Countries, (the + is for the other Non-OPEC countries in the group) announced a surprise decision to cut oil production by 2 million barrels per day (bpd)./
The de facto leader of the group, Saudi Arabia said the cut, which equals 2% of the global supply, was a necessary response to rising interest rates in the West/U.S. and a weaker global economy.
This surprise decision caused a pop in the oil sector. There are many ETF’s for oil and energy and the one I use in my weekly newsletter as my representation for oil is the United States Oil Fund LP, (NYSE: USO).
You can see the strong gap up yesterday on USO. It not only gapped up, but it stayed up at or a bit higher than its open price. This is a bullish move.
Today, the concern was to see if the price level it gapped up to yesterday holds or if it sells off.
The candle day shows it was a bearish reversal day (it traded and closed lower than it opened). Though it closed lower on the day it closed at or near the close of yesterday, we see it as a bit of confirmation the price level is being sustained.
Two things I am looking for is…
(1B) if the horizontal resistance price level of 72 will remain resistance. If USO trades up to 72 ill that be a sell point for traders/investors that drives the stock price down at that point.
(1B) does USO take out resistance at 72, maintain that price level indicating even higher prices are still to come
(2) Does USO see profit taking kick in where traders/investors sell some or all of their oil position(s) to bank some profits that happened because of this move.
If they do and USO starts to drift back in price, it will look like the ETF is filling in the gap that happened 2-trading days ago.
That wouldn’t be a surprise and it doesn’t necessarily mean the ETF will trade in a bearish fashion for long. Gaps tend to get partially or fully filles only to see traders/investors jump back in at a slightly lower price than where it gapped up to.
There may also be folks who did not get in on this pop in price and don’t want to chase the ETF price and the fill of the gap gives them another chance to partake in potential future price movement higher.
App: Toms Option Tools
Market Insight articles may show images of lists of stocks meeting a variety of options parameters like Unusual Call and or Put activity or Expensive IV found on my app Toms Option Tools.
Other times I will have other charts may work to amplify my educational points.
Those options data lists, however, can be found on my app Tom’s Option Tools. Use your device to search up and download this app and get free access to the Morning Reports section of the app.
Other parts of the app are available at a premium subscription rate, but the Morning Reports Lists are yours free.
Stock and options trading has large potential rewards, but also large potential risk.
You must be aware of the risks and be willing to accept them in order to invest in the stock and options market. Do not trade with money you cannot afford to lose.
This is neither an offer to buy/sell/ or recommend a particular stock or option.
Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been actually executed, the results may have under or overcompensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with hindsight.
No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.
Disclaimer of Warranties and Liabilities Tom Gentile and TomsTradingRoom, LLC including employees, consultants, and editors (“Publisher”) cannot and do not warrant the completeness or accuracy of the content found in our areas, or its usefulness for any particular purpose.
Tom Gentile and TomsTradingRoom, LLC also make no promises that our content or the service itself will be delivered to you uninterrupted, timely, secure, or error-free. Under no circumstances will Tom Gentile and TomsTradingRoom, LLC be liable for direct, indirect, incidental, or any other type of damages resulting from your use or downloading of any content on our site.
This includes, but is in no way limited to, loss or injury caused in whole or in part by our negligence or by anything beyond our control in creating or delivering any portion of Tom Gentile and TomsTradingRoom, LLC.
You are agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that Tom Gentile and TomsTradingRoom, LLC will not be liable for any I, investment decision made, or action taken by you, or others based upon reliance on news, information, or any other material published by Tom Gentile and TomsTradingRoom, LLC.
Tom Gentile and TomsTradingRoom, LLC relies on various sources of information that we believe to be accurate and reliable. However, we make no claims or representations as to the accuracy, completeness, or truth of any material contained on our site.
Tom Gentile and TomsTradingRoom, LLC are educational portals, providing content for educational and informational purposes only. Neither Tom Gentile nor TomsTradingRoom, LLC are a broker/dealer. Investors need a broker to trade stocks and options and must meet certain requirements. All securities, futures, and investments data and ideas are offered to self-directed investors. All prices in USD unless noted otherwise.
A full disclaimer can be found here: http://www.tomgentile.com/legal_disclaimers.html.