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 Energy, Industrials, and Materials Sectors.
Oil – Oil has been consolidating above support around the $51 level. This level is support because it was clearly defined resistance three times over the course of a year before finally being broken in December. It failed and had a significant selloff from this level in October of 2015, in early June, and again in October of 2016.
Copper – Copper broke its recent uptrend and is consolidating but it continues to test resistance around the $270 level. This is where it ran into resistance in November and early December. There does not seem to been clearly defined resistance between current levels and $300.
XLE – S&P 500 Energy Sector ETF – 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.
XLI – S&P 500 Industrials Sector ETF – 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.
XLB – S&P 500 Materials Sector ETF – 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, there was support there for a week but it was broken. 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.
XME – S&P 500 Metals and Mining Sector ETF – The XMEs continue to uptrend and are testing resistance around the $34 level. As expected, there is resistance at this level because it was resistance and a meaningful top in early December.
XOP – S&P 500 Oil & Gas Exploration & Production ETF – The XOPs are testing important support around the $40 level. The $40 level is support because it was resistance in August, October, and November of 2015 and again in October of 2016. If it breaks there may be a significant move lower.
OIH – VanEck Vectors Oil Services ETF – The OIHs have trended lower and are approaching possible support around $31. The $31 level is important because it was resistance in June and October, and again in November before they broke out.
ITA – iShares US Aerospace and Defense ETF – The ITAs may have broken through the top end of their recent range. They closed at $145.41.
IYT – iShares Transportation ETF – The IYTs continue to consolidate around the $165 level. Longer-term, if they go lower $145 is an important level because it was clearly defined resistance from March through October so it may be a meaningful support.