Oil got crushed yesterday. It fell by more than $5 a barrel. Of course, when there are big moves in the market, it creates profit opportunities.
The Energy Select Sector SPDR Fund (NYSE:XLE) tracks stocks in the energy sector. After the selloff, it found support around $47. This level was also support in March and April.
Each time the shares reached it, there was more than enough demand from the buyers to absorb all of the supply that the sellers had to offer. A move higher followed each time.
XLE is also oversold.
This means it is trading at an extreme below what would be its typical or usual trading range. This could bring buyers into the market. They will be expecting a reversion, or move higher, back to the average.
This combination of being oversold while at support means there is a good chance there is some kind of rebound.
