Up 1.6% Tuesday, the Energy Select Sector SPDR (NYSEArca: XLE) is providing investors with some relief, albeit slight, from a one-month decline of 5.4%,

Still, investors would do well to remember that one day does not make a trend, nor does one day reverse what has been an obvious bearish trend for XLE. XLE, the largest equity-based energy ETF, has tumbled 24% from its June peak. That puts the ETF firmly in bear market territory and lingering weakness in the oil patch could be a harbinger of more weakness to come for oil equities. [Traders Dodge Bearish Oil ETFs]

XLE “has broken both its 20 and 50 week moving averages. It is now nearing a test of the October closing low of $79.95 and intra-day low of $77.51.   These levels should act as near term support. The current leg down is a fifth wave of the downtrend and therefore may be getting close to a near term low,” said Street One Financial Market Technician David Chojnacki in an email exchange with ETF Trends.

Despite its struggles, XLE has added $1.3 billion in new assets over the past week, more than twice the inflows accrued by the second-place ETF. However, it is worth noting that some of the inflows to XLE could be coming courtesy of short sellers that are borrowing shares of the ETF in hopes of further declines. That situation, which is also at play with the United States Oil Fund (NYSEArca: USO), gives the impression that an ETF’s assets are rising. [Bottom Fishing With Oil ETFs]

Even if inflows to XLE and rival energy funds are of the purely bullish variety, these ETFs face challenges. For example, XLE allocates a combined 30% of its weight to Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX). The two largest U.S. oil companies are two of just six members of the Dow Jones Industrial Average that are in the red this year.

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