The S&P 500

BHT identifies meaningful trends and important supply and demand levels in the financial markets.  An understanding of these dynamics will add value to any investment process.  The following are important factors to consider in the S&P 500 Economic Sectors:

The S&P 500 was literally unchanged yesterday.  If you think about this, it is pretty amazing.  Considering that there are trillions of dollars changing hands and millions of players in the markets it is kind of hard to believe.  In the last 50 years, the SPX has only closed unchanged 31 times in 13,000 trading days.  It happened once in 2008, once in 1997, once in 1992, a few times in the 1980s, and the rest of the times that it happened were in the 1970s.    

It isn't surprising that it happened more back then because stocks traded in minimum increments of an 1/8, so stocks had fewer options of what price they were going to close at.  In other words, if a stock was going to close around $20, it could close at 19 7/8, 20, or 20 1/8.  Now with trading in pennies or even fractions of pennies, there hundreds of ways it close around $20...for example 20.01, 19.98, 20.0135 on so on.  The options are theoretically infinite so that is why an unchanged day is so unusual.

The S&P 500 has been consolidating for over a month between 2,250 and 2,270.  The most recent phase of this rally began when the technology sector broke important resistance.  At that time the SPX was trading around 2,210, so there may be support at that level if it heads lower in the longer-term.

Technology -  The XLKs are consolidating near the top of their recent range.  If they head lower there may be support around the $48 level because it was the top of the range from the middle of September through the end of October.  Longer-term, the $46 level was support in early September and early November. 

Financials - The move in the XLFs after the election was almost unprecedented.  It was one of their largest monthly gains ever.  They have been consolidating around $23.50 since then after breaking their uptrend.

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Healthcare - The XLVs have been trending higher after breaking out of their recent range.  There may be resistance around the $72 level.  Longer-term, the dynamics are very interesting because they could be forming a multi-year bearish reversal formation.

Consumer Staples - The XLPs are trending lower after failing at resistance around the $52 level.  This level is important because it was support in April and May, and then again throughout October.  Longer-term they have broken the uptrend that began in 2008.

Industrials - The XLIs continue to consolidate after making all-time highs.  Longer-term, if they sell off there may be support around the $59-60 level because this was the top of the range from July through early September. 

 

Energy - The XLEs have broken the bottom of their recent short-term range and are trending lower.  As expected there is resistance around these levels because they are the same levels that they found support at in late 2014 and early 2015.  If they continue to head lower there may be support around $71 because it was resistance recently in August and October.

 

Utilities - The XLUs continue to consolidate around the $48.50 level after breaking their recent downtrend.

 

Consumer Discretionary - The XLYs are trending higher and approaching all-time highs again after finding support around the $82 level.  As expected, this level was support because it was the top of the range in July and August.

 

Materials - The XLBs have broken their recent uptrend that began in early November and are consolidating after running into resistance around the $52 level.  As expected there was resistance at this level because it was the all-time high in early 2015.  $49 was the top of the range from the middle of July throughout the early part of September so there may be some support at that level if there is more selling or profit-taking.