[ad_1]
In this article, we examine the significant weekly order flow and market structure developments driving XLU price action.
The highest probability path for this week was for price discovery higher within the context of a completed corrective phase and buy excess development last week. This week’s primary expectation did play out; buy-side continuation developed from last week’s close, re-testing key supply before minor range extension higher developed to 59.01s in Friday’s auction, closing at 58.78s.
12-17 May 2019:
This week saw buy-side continuation in Monday’s auction, as last Friday’s late buyers held the auction. Price discovery higher developed to 58.71s. Selling interest emerged, 58.69s-58.63s, into Monday’s close. Monday’s late sellers held the auction as price discovery lower developed in Tuesday’s trade to 58.08s. Narrow balance developed, 58.08s-58.44s, into Wednesday’s auction the market churned near key resistance.
A minor probe lower developed early in Thursday’s auction to 57.87s. Buy excess developed there, driving price aggressively higher to 58.66s, once again challenging Monday’s stopping point. Selling interest emerged there, as rotation lower developed to 58.14s into early Friday trade. Buy excess again emerged, driving price back to key resistance where buying interest emerged, 58.70s, driving price higher in minor range extension higher to 59.01s ahead of Friday’s close, settling at 58.78s.
NinjaTrader
This week’s auction did see the primary expectation play out as price discovery higher developed following last week’s completion of the corrective phase. Within the larger context, this structural development implies potential for further price discovery higher.
Looking ahead, the focus into next week will center upon market response to this week’s minor range extension higher. Sell-side failure at this key area would target new all-time highs. Alternatively, buy-side failure at this key area would target key demand clusters below, 58.20s-58s/57-56.80s, respectively. From a structural perspective, the highest probability path is buy-side following the completed corrective phase. Within this near-term context, the intermediate term (3-6 month) has shifted buy-side with acceptance above 57.32s.
It is worth noting that sentiment based on the S&P Utility Sector Bullish Percent Index now reflects a bounce from the levels of neutral sentiment developed into early January. Stocks more broadly, as viewed via the NYSE, have also seen rising bullish sentiment from the December 2018 low. Asymmetric opportunity develops when the market exhibits extreme bullish or bearish sentiment with structural confirmation. Within the context of December 2018’s correction, the market developed a stopping point low within prior key demand. Subsequently, price discovery higher back to major resistance and new all-time highs has developed. The market has auctioned from levels of neutral sentiment to extreme optimism as price has made new all-time highs and now pulled back. Sentiment in the broad market has paused as utilities now see extreme optimism.
StockCharts
While data within the associated derivative (XLU sector futures contract) does not yet confirm extreme herding, the development of extreme optimism warrants caution regarding further buy-side potential for utility shares.
Sharedata Futures, Inc.
The market structure, order flow, and sentiment posture will provide the empirical evidence needed to observe where asymmetric opportunity resides.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
[ad_2]
Source link Google News
