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Tuesday, October 11, 2011

Bearish Near-Term Scenario for Oil


My intraday pattern work in NYMEX crude oil futures has triggered very preliminary signals that the overnight weakness from 86.09 to 83.97 is the start of a larger correction or period of weakness that projects into the 82.00-81.00 area next.


Only a resumption of strength -- in sympathy with continued strength in equities -- that propels nearby crude above 86.09 will invalidate my near-term scenario and argue for a run at testing 88.00 resistance thereafter.


ETFs to watch are the U.S. Oil Fund ETF (USO) and ProShares UltraShort DJ-UBS Crude Oil (SCO).

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