Crude Oil Looks Ready To Plummet

WTI Trades Near One-Week Low as Stockpiles Rise to 82-Year High

West Texas Intermediate crude traded near the lowest level in more than a week after government data showed U.S. stockpiles climbed to the highest in 82 years.
Futures were little changed in New York after slumping 2.6 percent yesterday, the most in more than two weeks. U.S. crude supplies increased 6.7 million barrels last week to 395.2 million barrels, the most in weekly data started in 1982, figures from the Energy Information Administration show. According to monthly data, they were last at this level in 1931. Inventories were forecast to climb 1.1 million barrels, a Bloomberg News survey showed.
 My view:

The massive surge in oil supply seems indicative of a slowing economy.

That, combined with some technical analysis on crude and the energy sector show some opportunity with inverse energy related ETFs.

Let's look at some charts:

Crude oil exhibits a series of lower highs and declining indicator strength.

Will it break down and test its former support level around $78?

The energy sector looks ready to break down significantly.

Lower highs like crude oil, and declining indicators for the last three months paint a bearish picture.

Note the gaps that have not been filled.

One is at 76 that could be filled within days (in yellow).

The other is way down at 71 (in golden).

Will XLE fall this low to fill the gap? 

Given the poor fundamentals with a slowing economy, it appears quite possible.

ETFs that benefit from a downturn in XLE are ERY and DUG.