BHT identifies meaningful trends and important supply and demand levels in the financial markets. An understanding of these dynamics will add Alpha to any investment strategy. The following are important factors to consider in the S&P 500 Economic Sectors:
The S&P 500 trended higher after breaking resistance at the 2,300 level. There was resistance at this level because it is important psychologically and it will probably be meaningful support if the SPX trades down to there again. Over the past week, the SPX has consolidated between 2,350 and 2,370.
Technology - The XLKs continue to trend higher. Longer-term, 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. 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 continue to consolidate around the $24.50 level after breaking the top of the range they were in from early December through early February.
Healthcare - The XLVs have trended higher since breaking important resistance around $72. This level was resistance in early November and mid-January. There may now be resistance around $76 because it was the top in August. Longer-term, they could be forming a multi-year bearish reversal formation.
Consumer Staples - The XLPs have been trending upwards since early January. They may run into some resistance around the $56 level because this is where they hit resistance and rolled over last July. Fridays close was $55.28.
Industrials - The XLIs are consolidating after trading at all-time highs. Short-term, there will probably be support around $64 because it was resistance in December and January. Longer-term, if they trade lower 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 been trending lower after hitting resistance around $76 in December. There was resistance around $76 because it was the same level that the XLEs found support at in late 2014 and early 2015. They are now testing support around $71-72. These levels were resistance from August through November.
Utilities - The XLUs have been in a steep uptrend for three weeks but they have become very overbought and are approaching levels that they found resistance at last July.
Consumer Discretionary - The XLYs have broken their short-term uptrend after making all-time highs. Short-term, there is support around $84. Longer-term, there will probably be support around $82 because it was the top of the range in July and August and it was support in early December and early January.
Materials - The XLBs continue to consolidate around the $52 level. As expected there is resistance at this level because it was the all-time high in early 2015. Longer-term, $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 they trade down to there again.