USO Chart – July 7, 2009

I charted United States Oil Fund LP (NYSE: USO) at 12:23pm when it last traded at $33.95.  While a lot of bearish news has caused a solid pull back in USO, it could be nearing support around this level just below $34.00.  The main indicators that bring me to that opinion are trend lines.  USO touched its trend line of lower lows this morning after coming very close to it yesterday (which could be my less than precise drawing).   In addition, the previous point of resistance and then support from May 2009 comes in around $34.00 too.

I’m long SLB which moves closely with USO and I’m staying in it for now.  If these trend lines break, I’ll have to consider jumping ship.  The horizontal line could break and the trend line of lower lows could keep going for a while still, so I’m going to keep my eyes on it.  If this $34 area breaks, $32.00 looks like the next line of support and then $30.00.  If USO gets down to $28.00 I plan to sell new naked puts on it.  At that point downside risk should be limited.