How far can the oil price free fall?

Sean BowerAlthough the stock market isn’t giving us any definitive action indicating which direction it’s headed, there’s an undeniable bear market where energy is concerned.

And guess what’s driving it straight down? It’s all about oil.

So the way I see it, there are 2 clear opportunities to make money from this situation. Let’s find out what they are…

OPEC just recently failed to agree on production cuts, so things continue to point downward for oil.

That’s just more of the same – the price per barrel of oil has fallen roughly $70 in the past 18 months! And there’s more room to dip if the technical surrounding oil have any meaning.

Now at $38 per barrel, oil still stands to fall another 7% down to $35 per barrel.

And that brings us to Opportunity #1 for you and I to make money on oil’s current situation…

Short oil in the near-term.

An easy way to profit off of anything in a free fall is simply to short sell it, which is basically borrowing shares to sell and them buying them back (hopefully at a lower price) in order to make money.

So while oil still has room to fall, this is a viable option.

But the flip side of this situation is that we can expect oil to turn around at some point, which means there’s a chance for you and I to get in near the very bottom and ride the price of oil up.

So Opportunity #2 is…

Find oil’s bottom and ride it up.

This, of course, sounds much easier than it really is. Any security can give us false signals that it’s fallen as much as it can, but there are also price points where we can expect oil to bounce.

So for now, don’t be afraid to profit from oil’s dip. But the long-term strategy is about finding the bottom.

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