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.