S&P 500 SECTOR SPDRS PREVIEW - SPY XLK XLF XLV XLY XLI XLP XLE XLB XLU
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 – After breaking the $286 level the SPYs saw some aggressive selling. The first level of support in the selloff was right around the $280 level. This level was resistance in February, March, and June and support in July and August. The next level that they found support at was around the $270 level. This level was support in May and June. Friday was a reversal day, so the market may rally on Monday. The should be resistance now around $280 and support around $270.
Technology – The XLKs found support around the $68.60 level. There is support at this level because it is where the lows were in May and June. After becoming oversold, they had a reversal day and ran into resistance around the $71 level. If it breaks to the upside there will probably be resistance around the $73 level because this is where the recent lows were in September. This sector is 28% of the S&P 500 makeup.
Financials – The XLFs found support around the $26.40 level. This is the same level that they found support at in late June / early July. There will probably be resistance around the $27 level because it was the lower end of the range earlier this year. This sector is 14% of the S&P 500 makeup.
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 saw aggressive selling on Wednesday and Thursday. Wednesday’s close was right at support around the $92 level. There was support there because it was the top and an all-time high in January and support in late August and early September. It will probably be a resistance level now. If they head lower there should be support around the $85.50 level because it was resistance in February and March, and support in July. This sector is 14% of the S&P 500.
Consumer Discretionary – The XLYs have been in a freefall over the past week but finally found support around the $107 level. There is support there because it was resistance in March and February. If they head higher there should be resistance around the $110 level because it was the top of the range at the end of June and in early July, and then support at the end of July. If they head lower there will probably be support again around $98.50 because it was the bottom of the range earlier this year. This sector is 13% of the S&P 500.
Industrials – The XLIs still seem to be in freefall, but they are very oversold. If they head lower there will probably be support around the $71 level because it was the low at the end of last year and again in May and June. If they rally they will probably hit resistance around the $76.50 level because it was the top of the range from May through August. This sector is 10% of the S&P 500.
Consumer Staples – The XLPs broke support around the $53.50 level. This level will now probably be resistance. It is an important level because it was support in February and March, and resistance in April. It was also the bottom of the range that began in August before it was broken. Longer-term, if they head lower there will most likely be support around the important $50 level. This sector is 7% of the S&P 500.
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 have seen a large selloff since breaking their recent uptrend and failing once again at important resistance around the $78 level. They found support around the $72 level but are oversold. This level has been the bottom of the range since August. There may be an oversold bounce. This sector is 6% of the S&P 500.
Energy Long-term – The $78 level is an important long-term resistance level for the XLEs. They failed there once again last week.
Materials – The XLBs saw aggressive selling after breaking support at the $58 level. They found support around the important $53.50 level. There is support here because it was resistance in the first half of 2017, and support in the second half. They are oversold and may see a trade-able bounce. This sector is 3% of the S&P 500.
Utilities – Despite Thursdays selloff, the XLUs have been trending higher since they found support again around the $52 level. This is where the lows were in July. If they 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. This sector is 3% of the S&P 500.