With coronavirus spreading in the US and OPEC unable to make a deal with Russia on cutting oil supply, oil flushed hard today. This flush into the low $40/bbl range tagged a major technical oil level. Today’s move could likely be a final flush out into a weekend of uncertainty. The United States Oil Fund LP (USO) hit key support at $8.75 today.
As a technician, I am an oil buyer and oil company buyer. Based on this major technical oil level I have picked up Exxon Mobil, which pays a 7%+ dividend at levels the stock has not seen since 2003-04. OPEC won’t let oil go much lower, the coronavirus will pass and oil will bounce. Using this major technical level on the flush today is what I have used on many trades in my 20+ year history. It takes out emotion and uses pure technicals.
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