Why I Am Not Bullish in the Near-Term...

Mark Putrino  |

If you want to be a successful trader, you need to understand what levels are important and why they are important. Don't waste your time with foolish things like Harmonic Charts, Elliot Wave, or Gann Theory. I can honestly tell you that in my two decades as an institutional hedge fund trader, I never once heard a successful manager or trader mention these things. But I can also tell you that successful traders and managers know where the important levels are.

There is a lot of resistance just above current levels in equities, so my guess is that the markets will either consolidate or head lower. I would not be long the market until these levels are decisively broken to the upside.

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. It will probably continue to be resistance in the near-term.

Image Source: Bullshead Trading

Technology Sector – 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. There will probably continue to be resistance here in the short-term.

Image Source: Bullshead Trading

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.

Image Source: Bullshead Trading

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.

Image Source: Bullhead Trading

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.

Image Source: Bullshead Trading

DISCLOSURE: Currently I do not hold positions in any of these SPDRs


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
XLE SPDR Select Sector Fund - Energy Select Sector 62.09 -1.45 -2.28 22,893,814
SPY SPDR S&P 500 260.47 -4.90 -1.85 116,961,071
XLV SPDR Select Sector Fund - Health Care 88.96 -3.10 -3.37 19,422,740
XLK SPDR Select Sector Fund - Technology 64.57 -1.62 -2.45 15,516,205

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