[ad_1]
In this article, we examine the significant weekly order flow and market structure developments driving XLU price action.
As noted in last week’s XLU Weekly, the highest probability path for this week was for neutral price discovery. This week’s primary expectation played out, albeit marginally, as balance developed early week at current, all-time highs, before buying interest emerged, 62.40s, driving price modestly higher to 62.80s, ahead of Friday’s close, settling at 62.58s.
NinjaTrader
26-30 August 2019:
This week’s auction saw price discovery higher in Monday’s auction, achieving a stopping point, 62.21s, as last Friday’s buy excess held as support. Buying interest emerged, 62.15s-62.16s, into Monday’s close. Monday’s late buyers held the auction as a gap higher open developed in Tuesday’s trade, achieving a stopping point, 62.74s, as the all-time high was tested. Minor sell excess developed there, halting the buy-side sequence, developing balance, 62.74s-62.23s, into Tuesday’s close.
Selling interest emerged, 62.43s/62.41s, early in Wednesday’s auction, driving price lower in retracement, achieving a stopping point, 61.91s. Buying interest emerged there, halting the sell-side sequence. Price discovery higher resumed in Thursday’s auction to 62.58s as buying interest emerged, 62.41s-62.58s, into Thursday’s close. Thursday’s late buyers held the auction as minor price discovery higher developed, achieving the new all-time high, 62.80s, ahead of Friday’s close, settling at 62.58s.
NinjaTrader
This week’s auction did not see the primary expectation play out in a pure sense as balance did develop before minor price discovery higher. Within the larger context, this week’s auction negates the recent sell excess as new all-time highs are formed.
Looking ahead, the focus into next week will center upon market response to this week’s buy-side breakout area, 62.20s-62.50s. 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, 61.40s-61.20s/61s-60.80s, respectively. From a structural perspective, the highest probability path near-term remains neutral as market structure and sentiment diverge. Within this near-term context, the intermediate term (3-6 month) remains buy-side barring buy-side failure at 61.32s (which held this week).
It is worth noting that sentiment based on the S&P Utility Sector Bullish Percent Index is now trending lower from extreme bullish sentiment. Stocks more broadly, as viewed via the NYSE, have also seen declining bullish sentiment. Asymmetric opportunity develops when the market exhibits extreme bullish or bearish sentiment with structural confirmation. While structure is buy-side, caution remains warranted in utility shares due to the divergence between sentiment in both the broader market and utility sector and the market structure.
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
