[ad_1]
In this article, we examine the significant weekly order flow and market structure developments driving XLF price action.
The highest probability path for this week, based on market structure, was for price discovery higher. This primary expectation did not play out as selling interest emerged early in Monday’s auction, halting the buy-side sequence before aggressive price discovery lower developed to 27.57s ahead of Thursday’s close, settling at 27.61s.
29 July-01 August 2019:
This week’s auction saw selling interest early in Monday’s trade at 28.72s, new 2019 highs. Price discovery lower developed to 28.44s where buying interest emerged into Monday’s close. Monday’s late buyers failed to hold the auction as the market opened gap lower on Tuesday, achieving a stopping point, 28.19s. Sellers trapped amidst structural buy excess there, halting the sell-side sequence. Minor price discovery higher developed through Tuesday’s trade into Wednesday’s auction, achieving a stopping point, 28.53s.
Buyers trapped there amidst structural sell excess as rotation back to the balance low developed. An initial failed probe lower developed early in Thursday’s trade to 28.14s where buy excess developed, driving price higher to 28.42s. Buyers trapped, 28.40s-28.30s, before an aggressive sell-side breakdown developed, driving price lower to 27.57s ahead of Thursday’s close, settling at 27.61s.
NinjaTrader
This week’s auction saw a new 2019 high develop early week where selling interest emerged, ultimately driving price aggressively lower in an initial corrective phase. Within the broader context, this week’s stopping point high and initial correction imply potential for further price discovery lower.
Looking ahead, the focus into next week’s auction will center upon market response to June’s key demand cluster, 27.70s-27.50s. Buy-side failure at this key demand area will target key demand clusters below, 27.30s-27s/26.30s-25.90s, respectively. Alternatively, sell-side failure at this key demand area will result in price discovery higher to challenge key supply overhead, 28.60s-28.70s/29.30s-29.80s, respectively. The highest probability path near-term based on market structure is for price discovery lower. The larger intermediate term bias (3-6 month) is now neutral provided failure at 28.14s holds.
It is worth noting that sentiment based on the S&P Financial Sector Bullish Percent Index now reflects a bounce from the pullback level of June. Stocks more broadly, as viewed via the NYSE, have now also seen a bounce from a similar level. Asymmetric opportunity develops when the market exhibits extreme bullish or bearish sentiment with structural confirmation. Following a period of consolidation in both the broad market and financials’ sentiment, financials’ sentiment trended higher once again toward extreme bullish sentiment implying caution is warranted regarding further upside potential.
StockCharts
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
