S&P 500 SECTOR SPDRS PREVIEW - SPY XLK XLF XLV XLY XLI XLP XLE XLB XLU
In financial markets, there are certain price levels that are more significant than others with regards to the amount of supply and demand that exists at them.
In financial markets, prices are always doing one of three things. They are either going up, going down, or staying the same.
BHT utilizes a process and methodology that has been developed over twenty years in order to identify these levels and price trends.
BHT does not utilize many of the traditional Technical Analysis Techniques such as Gann Theory, Harmonic Patterns, or Elliot Waves.
BHT questions and doubts the validity of many of these techniques and believes they are in the realm of Bigfoot and UFOs.
BHT utilizes Technical Analysis to identify meaningful trends and important supply and demand levels in the financial markets. The following are important dynamics to consider in the S&P 500 Economic Sector SPDRs:
S&P 500 – There should be support for the SPYs around the $270 level. They got back above this important level when the Fed talked about slowing down interest rate hikes. There is support there because it is where the lows were in May and June. It has also been important over the past month. There is resistance right around the $280 level. There is resistance at this level because it was resistance in February, March, June and last month, and it was support in July. These levels will probably continue to be resistance and support in the short-term.
S&P 500 YTD – If you want the be a successful trader, you need to understand where the important levels are and why they form. For example, the SPYs recently ran into resistance around the $280 level. There is resistance at this level because it was resistance in February, March, June and last month, and it was support in July. There should be support at the $270 level because it is where the lows were in May and June. They recently found a longer-term bottom right at the $260 level. There was support at this important level because it is where the lows were from February through May.
Technology – The XLKs are trading below important resistance around the $68.60 level. There is resistance around this level because it is where the lows were in May and June and it is also where the market found a bottom in October after the recent selloff. There will probably continue to be resistance here in the short-term.
Financials – The XLFs are testing resistance around the $27 level. This level was the bottom from March through June, and resistance recently. Longer-term it is easy to see the importance of the $25 level.
Financials Long-term – In January the XLFs failed at the same levels that they did when they peaked in 2007 before the crash. Markets do indeed have long-term memories and this clearly illustrates it. If the XLFs rally to this level they will probably run into significant resistance there once again.
Healthcare – The XLVs are testing resistance around the $96 level. There is resistance at this level because it is where the all-time highs were in September. They are overbought so expect some consolidation or profit taking. If they head lower there will probably be support around the $93.50 level. This is where the two most recent highs were in mid-October and mid-November.
Consumer Discretionary – The XLYs are trading just above the $107 level. The levels here aren’t clearly defined but there will probably be resistance around the $110 level. This level was resistance in June, support in July, and resistance recently. There will probably be short-term support around the $107 level. It has been an important level since February.
Industrials – The XLIs broke their recent downtrend and resistance around the $71 level. This level was the low at the end of last year and again in May and June. It will now probably be a short-term support level. Longer-term, there will probably be resistance around the $76.50 level because there was resistance there from April through July.
Consumer Staples – The XLPs are trending higher. This could be a bearish dynamic for the broader market. If they head lower they will probably find support around $53.50. $53.50 is an important level because it was support in February and March, and resistance in April. It was also the bottom of the range from August through October. Longer-term, if they head lower there will most likely be support around the important $50 level.
Consumer Staples Long-term – Longer-term, it is important to watch the $50 level in the XLPs if they head lower. This level was the low in 2016, and the top of the range throughout 2015. It was also the top of the range during this past May.
Energy – The XLEs are testing resistance around the $66.50 level. This level was support in February, March, and April. It will probably continue to be resistance in the short-term.
Energy Long-term – The $78 level is an important long-term resistance level for the XLEs. They failed there once again last month. The $66.50 level has been important support and it may now becoming an important resistance level.
Materials – The XLBs broke their recent downtrend and resistance around $53.50. There is resistance there because it was resistance in the first half of 2017, and support in the second half. It is now a support level. Longer-term, there should be resistance around the $58 level because it was support in June, July, and August.
Utilities – The XLUs have been consolidating since they broke their recent uptrend. They have been consolidating around the $55 level. If they eventually break $52 and head lower longer-term, there will probably be support around the $49 level because it was the bottom of the range from February through June.