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 is testing resistance at the 2,300 level. There is resistance at this level because it is important psychologically. If it heads lower there will probably be short-term support around 2,280 because it was the top of the range that it traded in from early December through late January.
Technology - The XLKs continue to trend higher. 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 continue to consolidate between the $23 and $23.50 levels.
Healthcare - The XLVs broke their short-term downtrend and as expected found support at $69. Now they are approaching $72 where they hit resistance in early November and mid-January. Longer-term, the dynamics are very interesting because they could be forming a multi-year bearish reversal formation.
Consumer Staples - The XLPs have been consolidating between the $52 and $53 levels, but broke the top of their recent range today. The $52 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 are consolidating after trading at all-time highs. Short-term, there is support at $62. 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 been trending lower after hitting resistance around $75. There was resistance around $75 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. This level was the top of the range from August throughout mid-November.
Utilities - The XLUs continue to consolidate around the $48.50 level. They have been trading sideways since early December.
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 have had some profit taking after breaking important resistance around the $52 level. As expected there was resistance at this level because it was the all-time high in early 2015. Short-term, that level had been support over the past week but that level was broken today. 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.