As expected, USO did bottom out at 42.56 on 01/18/2007 and strongly rebounded from there. It’s up 5.50 dollars since I recommended buying it two weeks ago and it may be at or nearing the end of this particular move. In other words, taking profits at this level (a little below 49) would not be, in my humble opinion, a horribly ill-advised trade for the reasons presented below. It goes without saying that, should all the resistance levels be broken, re-entering the position is always an option. My reasons are as follows:

USO is getting close to that blue falling resistance line shown on the chart above (click to enlarge). It’s also closing in on previous support at around 50 (previous support often becomes resistance). The 14-day RSI is almost at its previous high of 60, the level it reached before USO's collapse. Finally, to add to the weight of evidence, the last few days of the rally have seen decreasing volume.