Stocks kicked off the week on a positive note yesterday, as the broad market blew off last Friday's pullback and built on the gains of the June 13 follow-through day. The main stock market indexes jumped roughly 0.8% each, as volume in both the NYSE and Nasdaq increased 8% above the previous day's levels. The higher volume gains caused both the S&P and Nasdaq to register a bullish "accumulation day" that was indicative of the return of institutional buying. However, most of the day's advance was the result of an opening gap up, as stocks subsequently chopped around in a sideways range the rest of the day.

Going into today, US Oil Fund ($USO) is a new ETF swing trade setup on our watchlist for potential buy entry. This is a commodity ETF that approximately tracks the price of crude oil futures contracts. For quite some time, the price of crude has been in a range, but there appears to be a changing of the guards shaping up. If it follows through, we will see a dominant trend reversal that could at least lead to a new intermediate-term uptrend in crude oil. Take a look at the weekly chart pattern of $USO below:



On the weekly chart, notice that $USO broke out above resistance of its downtrend line a few weeks ago. This followed an "undercut" of its November 2012 lows that happened in April 2013. That move likely had the effect of washing out the last of the "weak hands" who wanted out, thereby absorbing overhead supply that will now enable $USO to more easily move higher.

Zooming into the shorter-term daily chart of $USO, we see that the ETF broke out above resistance of its short-term downtrend line (from the April 2 high) just two days ago and is holding the breakout:



Although it obviously might have been better to buy on the day of the June 14 gap up, this ETF is still not too far gone to provide a decent buy entry with a positive reward-risk ratio. Subscribing members of The Wagner Daily swing trading newsletter should note our exact and preset trigger, stop, and target prices for this trade setup in the "watchlist" section of today's report.

By the way, one benefit of trading commodity ETFs such as $USO is they frequently have a low correlation to the direction of the major indices such as the S&P 500 and Nasdaq. Therefore, regardless of the stock market's next move, $USO is capable of doing its own thing. This may help lower overall risk in a trading portfolio that is perhaps too reliant on the direction of the broad market. In addition to commodity ETFs, currency ETFs, fixed-income ETFs, and (to a lesser degree) international ETFs can provide the same benefit of low US stock market correlation.

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.