If we think the US Oil Fund ETF (USO) is going higher, then wouldn't that be bullish for gold, if only temporarily? And vice-versa: If the SPDR Gold Shares (GLD) is headed lower, as we are seeing (today), would not that take the USO down also?

I really don't know if the USO will survive my stop of 29.10, and today's profile does suggest that the metals complex is under pressure across the board (not the grains, and not Natural Gas, which interestingly, has caught a bid today -- every dog has its day, right?). But judging from the enclosed daily chart comparison, the USO has not been very responsive to any of the GLD rallies since July, and while weakness in the GLD certainly adds pressure to the USO, my sense is that the relationship on the downside is not very compelling either. The oversold condition of the USO on a near and intermediate term basis is much more intense than the current overbought condition of the GLD after its November-December advance.

Still, as we noted earlier to our subscribers, while the pattern carved out by the USO off of its December 15 high at 40.73 into yesterday's low at 30.41 exhibits the right look of a completed downleg, the price structure must hurdle and sustain above key near-term resistance at 31.60/70 to trigger significant initial buy signals -- that will project prices towards 33.10/40 thereafter.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.