Trader's Daily Notebook: Watch Out for Price and Value Migration

 | Jun 19, 2017 | 7:00 AM EDT
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After a 10-handle decline to begin the day, the E-Mini S&P 500 futures (Es) rallied all the way back, to close within a single tick of the opening print and only three ticks beneath the prior session close. Hardly the sort of session traders hung up on picking a top expected to see.

The never-ending tests of both the eight-day and 21-day exponential moving averages are becoming a bit stressful for shorter timeframe bulls. But as we've been discussing in Trader's Daily Notebook, there's no reason to fade responsive buyers until these frequent day timeframe declines become more sticky, and value begins to migrate lower.

E-Mini S&P 500 futures (Es) -- Daily Chart

At some point, price and value will migrate beneath our two shorter timeframe moving averages; once that happens, we'll quickly pivot toward a more bearish trading posture.

Several readers asked whether I had any interest in the names adversely affected by the announced Amazon.com AMZN acquisition of Whole Foods WFM. For the most part, the answer is no.

I don't see much to like in the charts of Dollar Tree Stores DLTR or Dollar General DG, and both Kroger KR and Supervalu SVU trade horribly. Both Costco COST and Walmart WMT gapped lower on the acquisition announcement, but given their positioning above the 200-day simple moving average (SMA), I'd expect bulls in the space to focus their attention here.

Walmart WMT -- Daily Chart
Costco COST -- Daily Chart

Between Walmart and Costco, I'd rather pursue Walmart, simply because it was trending higher prior to Friday's bearish gap, and Costco's unpredictable gaps (higher and lower) simply make it too treacherous for me to want to get involved. The 6.5-month trendline break in shares of Costco also looks a bit concerning. The bottom line is I'd pass on Costco and stick with Walmart, if you want to be involved at all.

Another name a few readers inquired about is Target TGT, but aside from its impressive 4.5+% dividend yield, there's really not much to like about the name. The most actively traded price zone (composite value) dating back to late February is 55.05 to 55.60. So for the time being, I'd avoid to name until it's recaptured that area.

Target TGT -- Daily Chart

Moving on to Monday's Es auction, we'll begin the day by focusing on 2431.50. An open above that level that holds the opening print and volume weighted average price (VWAP) would be expected to drift toward 2436 and 2441.75. Value migration above the low-2440s is still not something I'd want to fade, as very limited legacy supply exists within or above that area.

S&P 500 Futures -- 15-Min Volume Profile

A failed trade from 2431.50 isn't expect to give sellers an advantage, but it does encourage rotation back down toward 2425 to 2426. As long as value remains above the mid-2420s, I see no reason to hang on to a bearish bias. As price breaks 2425, a path toward 2418.25 to 2419.75 opens. And it's a sustained break of 2418.25 that begins to push us toward a more bearish state of mind.

Any trading or volume profile related questions can be posted in the comments section below, emailed to me at parkcityyeti@gmail.com or posted to my twitter feed @ByrneRWS.

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we like this chart here, it appears ready to move higher. BOUGHT BZUN OCT 35 CALL AT 3.40
Large-cap, high-quality McKesson (MCK) is too cheap now, at $147.51 or so. The stock hit $243.60 more than 2.5...

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