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In this article, we examine the significant weekly order flow and market structure developments driving XLK’s price action.
As noted in last week’s XLK Weekly, the highest probability path for this week was for price discovery lower within the context of an incomplete corrective phase from 82.78s. The primary expectation did not play out as the retracement rally from 75s continued through key resistance, 80.15s, as price discovery higher developed to 81.90s within key supply at all-time highs ahead of Friday’s close, settling at 81.50s.
NinjaTrader
03-06 September 2019
This week’s auction saw price discovery lower in Tuesday’s auction as Friday’s late sellers held the auction through the holiday. Price discovery lower developed, achieving the weekly stopping point low, 78.28s, where buying interest emerged, halting the sell-side sequence. A higher low developed from key structural support, 76.84s. A gap higher open developed in Wednesday’s auction, driving price higher, achieving a stopping point, 79.94s, where selling interest emerged into Wednesday’s close.
Wednesday’s late sellers failed to hold the auction as a gap higher developed in Wednesday’s trade through key supply, 80s-81s. Price discovery higher continued, achieving the weekly stopping point high, 81.90s, in Thursday’s trade. Minor structural sell excess developed there, halting the buy-side sequence. Balance development ensued, 81.90s-81.28s, ahead of Friday’s close, settling at 81.50s.
NinjaTrader
This week’s auction saw price discovery higher as the retracement rally continued through key supply at 80s toward all-time highs. Within the larger context, the corrective phase must now hold within this major supply or a new buy-side phase will develop.
Looking ahead, the focus into next week’s auction will center upon market response to major supply, 81.75s-82.75s, at all-time highs. Buy-side failure at this cluster would target key demand clusters below, 80s-79s/77.25s-76.50s, respectively. Alternatively, sell-side failure to drive price lower through this cluster would target key supply clusters overhead, new all-time highs. From a structural perspective, the highest probability path near-term is buy-side within the context of an incomplete corrective phase. Within this near-term context, the intermediate-term (3-6 month) bias remains neutral (barring development of new highs).
It is worth noting that sentiment based on the S&P Technology Sector Bullish Percent Index has seen bullish extreme sentiment bounce from lows made in June 2019. Stocks more broadly, as viewed via the NYSE, are now exhibiting a neutral stance in bullish sentiment. Asymmetric opportunity develops when the market exhibits extreme bullish or bearish sentiment with structural confirmation. Caution remains warranted on the buy-side as market structure and sentiment are divergent, implying a neutral bias.
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.
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