USO Chart – Support Not Far Away?

I charted the large Oil ETF, USO, at 2:48 pm on July 29, 2009 while USO was trading at $33.56.  USO gapped down this morning to open just below $35.00 and has drifted down from there throughout the day.  Once oil changes directions it typically lasts for more than a few days as the “big boys” unwind or add to their positions.  Support might not be too much lower though.  The trend line of higher lows that started three months ago is only a little more than a dollar away for USO.  Just before that is the 100 day moving average.  The 100 day along with the trend line of higher lows worked as support a couple of weeks ago and could do the same again this week.  I think the horizontal line I drew is a wishful line and doubt it’ll hold support.  It was more of a coincidence for where the current price lined up to in the past.

I sold USO August 33 naked puts at the beginning of last week.  I had a limit order in to buy to close if the option premiums dropped quickly enough, but missed the low trade by five cents on Monday.  Now I’m sitting on a paper loss.  If my chart theory is correct, I’ll be back to a profit fairly soon.  That said, upside should be fairly limited so I might add some naked calls to my position too.