XLF Weekly: Pullback From All-Time Highs Stalls As Balance Develops

Summary

• Minor price discovery lower to 30.57s in Monday’s auction where buying interest emerged, halting the sell-side sequence.
• Balance developed ahead of the Christmas holiday before price discovery higher ensued to 30.91s into the week’s end.
• Bullish breadth stalls in bullish extreme area.
• This week’s auction saw minor price discovery lower to 30.57s, before balance developed into week’s end.

In this article, we examine the significant weekly order flow and market structure developments driving NYSEARCA:XLF price action.

As noted in last week’s XLF Weekly, the highest probability path for this week was for price discovery higher, barring failure of 29.35s as support. This primary expectation did not play out as minor price discovery lower developed in Monday’s auction to 30.57s near key support. Buying interest emerged there, halting the sell-side sequence before price discovery higher developed after Wednesday’s holiday to 30.91s ahead of Friday’s close, settling at 30.77s.

23-27 December 2019:

This week’s auction saw price discovery lower, achieving the stopping point low, 30.57s, in Monday’s auction as last Friday’s late sellers held the auction. Buying interest emerged, 30.58s-30.65s, halting the sell-side sequence near key support. Balance developed, 30.57s-30.69s, through Tuesday’s auction before buying interest emerged, 30.66s, into Tuesday’s close ahead of Wednesday’s holiday.

Tuesday’s late buyers held the auction, as a gap higher open developed in Thursday’s auction, achieving a stopping point, 30.85s. Balance developed, 30.85s-30.76s, into Thursday’s close. A buy-side breakout developed early in Friday’s trade, achieving the weekly stopping point high, 30.91s. Sell excess developed there, halting the buy-side sequence ahead of Friday’s close, settling at 30.77s.

This week’s auction saw minor price discovery lower to 30.57s where buying interest emerged, halting the sell-side sequence as balance developed into Wednesday’s holiday. Price discovery higher developed to 30.91s ahead of Friday’s close. Within the broader context, balance developed near all-time highs following the buy-side breakout above prior key intermediate resistance, 28.70s.

Looking ahead, the focus into next week’s auction will center upon market response to the key trade cluster, 30.85s-30.76s. Sell-side failure to drive price lower back through this area will result in price discovery higher to key supply above, 31s-31.05s/new all time-highs, respectively. Alternatively, buy-side failure at this area will target key demand

Analyst’s 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.