I think oil is starting to become oversold in the way the financials were a month ago:
- At $113 a barrel oil is down about 23% from its highs last month.
- The 200 DMA (Day Moving Average) is right around $110 and I’d think that would represent some pretty good support (Oil Chart with 200 DMA).
- Volume in the ProShares Ultra Oil & Gas ETF hit a record today after a steady ascent for a couple months (DIG 6 Month Chart).
- I think the dollar rally which has been putting so much pressure on oil is due for a break.
It’s been a relentless selloff in oil the last 6 or 7 weeks and I think it’s due for a bounce sometime soon.
Disclosure: Top Gun is long the ProShares Ultra Oil & Gas ETF (DIG).