Important Levels to Watch this Week...

Mark Putrino  |

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.

Prices are always doing one of three things. They are either going up, going down, or staying the same.

Bulls Head Trading (BHT) utilizes a process and methodology that has been developed over 20 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...fun to talk about but hardly credible.

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 – The  (SPY) ran into 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. There has been support around the $270 level. There is support there because it is where the lows were in May and June. These levels will probably continue to be resistance and support in the short-term.

 SPY

S&P 500 YTD – If you want the be a successful trader, you need to understand where the important levels are. For example, the SPY just 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 is support at the $270 level because it is where the lows were in May and June. The SPY recently found a bottom right at the $260 level. There was support there because it is where the lows were from February through May.

 SPY S&P 500


Technology – The  (XLK) ran into resistance around the $71 level. There is support around the $68.60 level because it is where the lows were in May and June. There will probably continue to be resistance and support at these level in the short-term.

 XLK

Financials – The  (XLF) is back above the $27 level. It has been support over the past few days and it was support from March through June. If this level breaks it could be an indication that the broader markets will head lower.

 XLF financial SPDR

Financials Two Year – The XLF recently found support around the $25 level. This level was resistance in March and July / August of 2017. It is also important psychologically.

 XLF financials


Financials Long-term – In January the XLF failed at the same levels that it did when it peaked in 2007 before the crash. Markets do indeed have a long-term memory, and this clearly illustrates it. If the XLF rallies to this level it will probably run into significant resistance there once again.

 XLF financials SPDR

Healthcare – As expected, the  (XLV) found support around the $85.50 level last month. There was support at this level because it was resistance in February and March, and support in July. It is trading above the $92 level, which was an important level because it was the top in January and support in September. However, this level‘s importance has diminished but it still may provide some support in the short-term.

 XLV

Consumer Discretionary – The  (XLY) is trading just above the $110 level. There is support around this level because it was resistance in June, support in August, and resistance again in October.

 XLY SPDR

Industrials – The  (XLI) broke its 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. It has been consolidating.

 XLI

Consumer Staples – The  (XLP) is trending higher. This could be a bearish dynamic for the broader market. If it heads lower, it 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 the XLP heads lower there will most likely be support around the important $50 level.

 XLP

Consumer Staples Long-term – Longer-term, it is important to watch the $50 level in the  (XLP) if it heads 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.

 XLP

Energy – The  (XLE) found support around the same levels that were support in February, March, and April. The $66.50 level will probably continue to be support in the short-term, and there will probably be resistance around the $72 level. This is where the bottom was in August and September.

 XLE

Energy Long-term – The $78 level is an important long-term resistance level for the XLE. It failed there once again last month. The $66.50 level has been important support.

 XLE

Materials – The  (XLB) broke its 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 will now probably be a support level. There should be resistance around the $58 level because it was support in June, July, and August.

 XLB

Utilities – The  (XLU) has been consolidating since it broke its recent uptrend. If it eventually breaks $52 and heads lower longer-term, there will probably be support around the $49 level because it was the bottom of the range from February through June.

 XLU


DISCLOSURE: Sometimes BHT takes the positions mentioned in the analysis.


The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
XLF SPDR Select Sector Fund - Financial 24.36 0.12 0.50 47,329,683
XLE SPDR Select Sector Fund - Energy Select Sector 61.93 -0.16 -0.26 6,744,854
SPY SPDR S&P 500 259.51 -0.96 -0.37 49,990,593
XLV SPDR Select Sector Fund - Health Care 88.31 -0.65 -0.73 9,018,020
XLP SPDR Select Sector Fund - Consumer Staples 53.98 -0.52 -0.95 9,837,791
XLK SPDR Select Sector Fund - Technology 64.48 -0.09 -0.14 6,127,899
xly SPDR Select Sector Fund - Consumer Discretionary
XLB Materials Select Sector SPDR 51.41 0.09 0.18 5,384,752
XLI SPDR Select Sector Fund - Industrial 67.01 -0.04 -0.06 8,476,997
XLU SPDR Select Sector Fund - Utilities 55.82 -1.00 -1.76 9,524,135

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IBM

     
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