S&P 500 Sector SPDRs Preview - October 20th, 2018

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 SECTOR SPDRS PREVIEW - OCTOBER 20TH, 2018 PDF

S&P 500  Short-term – As expected, the SPYs found support around $270 and ran into resistance around $280.  There is resistance around the $280 level because it was resistance in June and support in July.  It was also resistance in February and March.  There is support around the $270 level because it was support in May and June.  The low trade on October 11th was at $270.36.   These levels will probably continue to be support and resistance in the short-term.  

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 is now resistance because it was resistance in February, March, and June.  It was also support in July and August.  There is support around the $270 level because this level was support in May and June.  There will probably continue to be resistance around $280 and support around $270 in the short-term.

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.  They have run 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 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 is 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 closed below the $92 level.  This level will probably be resistance now because it was the top and an all-time high in January and support in late August and early September.  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 are testing support around the $107 level.  There is support there because it was resistance in March and February.  As expected, there is 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 break the $107 level and 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 are consolidating but they are still in a downtrend.  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 closed back above the important $53.50 level.  The action was unusual.  It shows that money is flowing into this sector because it is a defensive play.  People will always need staples regardless of how the markets are doing so this shows bearish sentiment for the overall markets.  $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 since 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 this level may be breaking.  They spent sometime consolidating so they are not oversold anymore.  This level has been the bottom of the range since August.  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 three weeks ago.

Materials – The XLBs saw aggressive selling after breaking support at the $58 level.  They found support around $53.50.  There is support here because it was resistance in the first half of 2017, and support in the second half.  They have consolidated and may now be breaking the level.  This sector is 3% of the S&P 500.

Utilities – 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 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.  This sector is 3% of the S&P 500.