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 Short-term – The SPYs have broken their recent uptrend and are trading sideways. Trendlines aren’t magical and mystical. They are simply graphical pictures of the supply and demand dynamics that are occurring in a market. In this case the forces of demand have been in control. The break of the uptrend line illustrates that the forces of supply are overcoming, or at least equalizing with, the forces of demand. If they head lower there should be support around the $286 level.
S&P 500 – After making an all-time high on September 18th, the SPYs have broken their recent uptrend and are trading sideways. If they head lower there should be support around the $286 level because it was resistance earlier in the year. It was also support at the beginning on September. The next level of support will probably be around the $280 level because it has been an important level this year as well.
Technology – The XLKs have been consolidating between the $73 and $75 levels since making all-time highs in late August. The are at the top of the range and have formed an ‘ascending triangle’ pattern. This is typically a bullish indication because it illustrates that as time passes the buyers have become more aggressive and are willing to pay higher prices. This sector is 28% of the S&P 500 makeup.
Financials – The XLFs have been in a free-fall since September 18th, the day the SPYs made an all-time high. It is important to notice that this sector has not participated in the recent rally. They have been range-bound since March. There may be support around the $26.80 level because this is where the recent lows have been. 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 are trending higher and making new all-time highs. If they head lower there should be support around the $92 level. It was the top and an all-time high in January. This sector is 14% of the S&P 500.
Consumer Discretionary – The XLYs are consolidating near all-time highs. The top of the range has been around $117.50 and the bottom has been around $115. There was support around the $110 level because it was the top of the range at the end of June and in early July. There will probably be support there again if they head lower. This sector is 13% of the S&P 500.
Industrials – The XLIs failed at resistance at the $80 level. There is resistance around these levels because they were the highs in January. If they head lower there will probably be support around $76.50 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 their recent uptrend and are consolidating between $53.50 and $55. They are at the lower end of the range. 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 are trending higher and are back above the $74 level. It seems that this level isn’t important anymore. The two most recent lows have been right around $72 so there may be support there again if they head lower. This sector is 6% of the S&P 500.
Energy Long-term – The XLEs failed at the $78 level in mid-May and more recently on July 10th. This is where they found resistance in January. They also hit resistance and rolled over at this level in December of 2016.
Materials – The XLBs have been in a free-fall since September 18th, the day the SPYs made an all-time high. They are testing support around $58, which has been the bottom of the range since June. This sector is 3% of the S&P 500.
Utilities – The XLUs broke the lower side of their recent range and found support 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.