Macro Market Levels & Trends Preview - January 23rd, 2017

1

Mark Putrino, CMT www.bullsheadtrading.com [email protected]

BHT identifies meaningful trends and important supply and demand levels in the markets. An understanding of these dynamics will add Alpha to

any investment strategy. The following are important factors to consider in the Financial Markets this week:

Equities - The S&P 500 has been consolidating for over a month between 2,250 and 2,280. The most recent phase of this rally began when the technology sector broke

important resistance. At that time the SPX was trading around 2,210, so there may be support at that level if it heads lower in the longer-term.

Russell 2000 Smallcap Equities - After making all-time highs last month, the IWMs are testing the lower end of the recent range. In the short-term, $135 has been support but

it may be deteriorating. Longer-term, there may be support around the $129-130 level because this was the top and an all-time high in June of 2015.

Russell Microcap Equites - The IWCs have been trending lower and as expected are testing support around the $84.50 level. This level is important support because it was

the peak and an all-time high in June of 2015. A break of this level could lead to a meaningful move lower.

S&P 500 Technology Sector - The XLKs continue to trend higher. If they head lower there may be support around the $48 level because it was the top of the range from the

middle of September through the end of October. Longer-term, the $46 level was support in early September and early November.

S&P 500 Healthcare Sector - The XLVs are trending lower since breaking their short-term uptrend after running into resistance around $72. There was resistance around $72

because it was clear resistance in early November. Longer-term, the dynamics are interesting because they could be forming a multi-year bearish reversal formation.

S&P 500 Financial Sector - The move in the XLFs after the election was almost unprecedented. It was one of their largest monthly gains ever. They have been consolidating

around $23 and are in a slight downtrend after breaking the lower end of the trading range they were in throughout December and early January.

Gold - Gold has broken the uptrend that began at the end of December.

Oil - Oil has been consolidating and as expected found support around $51. This level is support because it was clearly defined resistance four times over the past 16 months.

It failed and had a significant selloff from this level in October of 2015, in early June, and again in October.

Equity Momentum - 65% of NYSE Stocks are trading above their 200-day moving averages. This is a neutral reading.

Interest Rates - Ten-year yields have risen from 1.37% in July to 2.46%.

US Dollar Index - The US Dollar Index is consolidating and testing support around the 100 level. This level was the exact top in March and November of 2015. It is truly an

amazing phenomenon that a market of trillions of dollars would turn at such a precise round level. No fundamental analyst could explain why this happens.

Macro Market Levels & Trends Preview

Analysis of Supply & Demand Dynamics in the Financial Markets

January 23rdh, 2017

2


Large Cap Equities - The S&P 500 has been consolidating for over a month between 2,250 and 2,280. The most recent phase of this rally began

when the technology sector broke important resistance. At that time the SPX was trading around 2,210, so there may be support at that level if it

heads lower in the longer-term.

3


Russell 2000 Smallcap Equities - After making all-time highs last month, the IWMs continue to trade sideways but are testing the lower end of the

recent range. In the short-term, $135 has been support but it may be deteriorating. Longer-term, there may be support around the $129-130 level

because this was the top and an all-time high in June of 2015.

4


Russell 2000 Smallcap Equities Long-term - After making all-time highs last month, the IWMs continue to trade sideways but are testing the lower

end of the recent range. In the short-term, $135 has been support but it may be deteriorating. Longer-term, there may be support around the $129-

130 level because this was the top and an all-time high in June of 2015.

5


Russell Microcap Sector - The IWCs have been trending lower and as expected are testing support around the $84.50 level. This level is important

support because it was the peak and an all-time high in June of 2015. A break of this level could lead to a meaningful move lower.

6


Russell Microcap Sector Long-term - The IWCs have been trending lower and as expected are testing support around the $84.50 level. This level

is important support because it was the peak and an all-time high in June of 2015. A break of this level could lead to a meaningful move lower.

7


S&P 500 Technology Sector - The XLKs continue to trend higher. If they head lower there may be support around the $48 level because it was the

top of the range from the middle of September through the end of October. Longer-term, the $46 level was support in early September and early

November.

8


S&P 500 Healthcare Sector - The XLVs are trending lower since breaking their short-term uptrend after running into resistance around $72. There

was resistance around $72 because it was clear resistance in early November. Longer-term, the dynamics are interesting because they could be

forming a multi-year bearish reversal formation.

9


Healthcare Long-term - Longer-term, the XLVs could be forming a multi-year Bearish reversal formation. This is a very important and interesting

dynamic. This sector rallied throughout the Obama Presidency. One can argue that this sector profited due to the Affordable Care Act. Now that

Mr. Trump has said he will repeal Obamacare and this could be why this sector is showing long-term bearish indications. The $64 level is very

important because it was the bottom in September of 2015 and again in February of 2016.

10


S&P 500 Financial Sector – The move in the XLFs after the election was almost unprecedented. It was one of their largest monthly gains ever.

They have been consolidating around $23 and are in a slight downtrend after breaking the lower end of the trading range they were in throughout

December and early January.

11


Gold – Gold has broken the uptrend that began at the end of December.

12


Oil Short-term – Oil has been consolidating although it has been in a slight downtrend over the last two weeks and as expected found support

around $51. This level is support because it was clearly defined resistance four times over the past 16 months. It failed and had a significant selloff

from this level in October of 2015, in early June, and again in October. If the $51 level breaks there could be a meaningful move lower. $43 was

support in September and November.

13


Oil – Oil is consolidating since breaking important resistance around the $51 level. It tested this level four times over the past 16 months. It is now

support. It was the low on Tuesday and Wednesday. It failed and had a significant sell-off from this level in October of 2015, in early June, and

again in October of 2016.

14


Equity Momentum – 65% of NYSE stocks are trading above their 200 Day Moving Averages. This is a neutral reading which suggests that a large

short-term move is not imminent assuming nothing unusual happens.

15


Interest Rates - Ten-year yields have risen from 1.37% in July to 2.46%.

16


US Dollar Index – The US Dollar Index is consolidating and testing support around the 100 level. This level was the exact top in March and

November of 2015. It is truly an amazing phenomenon that a market of trillions of dollars would turn at such a precise round level. No fundamental

analyst could explain why this happens.

17


Summary:

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.

In financial markets, prices are always doing one of three things. They are either going up, going down, or staying the same.

BHT utilizes a process and methodology that has been developed over twenty years in order to identify these levels and price

trends.

BHT does not utilize many of the traditional Technical Analysis Techniques such as Fibonacci Retracements or Elliot Waves.

BHT questions and doubts the validity of many of these techniques and believes then belong in the realm of Bigfoot and UFOs.

The BHT philosophy and method is based on experience, common sense, and logic. The founder spent almost two decades trading

illiquid securities and this background gave him the ability to understand how to identify these levels and price trends.

An understanding and awareness of these levels and trends will add Alpha to almost any investment strategy.

BHT’s goal is to contribute to and enhance your research and investment process.

Bulls Head Trading Analysis, LLC was founded by Mark Putrino, CMT.

Mark has nearly two decades of experience in the institutional investment management industry as a professional securities trader. Before founding

Bulls Head, he spent more than 15 years as the Head Trader at three different institutional hedge fund and money management groups, all of which

exceed or exceeded more than $1 billion dollars in managed assets. His experience also includes trading directly for two of the best money

managers in the history of the industry, Mario Gabelli and Steven A. Cohen.

Mark is a member of the Market Technicians Association and has held the Chartered Market's Technician Certification (CMT) since 2002. He

earned a Master’s Degree in Finance at New York University, and a Bachelors in Economics at the University of Connecticut.

Macro Market Levels & Trends Preview - January 23rd, 2017

Documents

Transcript of Macro Market Levels & Trends Preview - January 23rd, 2017