Trader's Daily Notebook: Pay No Mind to the Trump White House Antics

 | Aug 01, 2017 | 7:00 AM EDT
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Monday's most newsworthy event had absolutely nothing to do with equities, but it still had the financial media all aflutter. After tapping Anthony Scaramucci to act as White House communications director, it appears President Trump changed his mind. He removed Scaramucci less than two weeks after giving him the position. Scaramucci wasn't actually slated to begin his duties until Aug. 15.

Should participants care about this latest piece of Trump administration drama? Absolutely not.

When it comes to politics -- or most accurately, when it comes to the Trump White House -- equity markets could not care less about what's going on inside the beltway. As entertaining as it can be to see what the President is going to tweet about next, I'd encourage participants of all timeframes to avoid making decisions based solely on what is occurring at 1600 Pennsylvania Ave.

As far as Monday's E-Mini S&P 500 futures (Es) auction is concerned, volume came in toward the higher end of what we saw throughout the month of July, at a bump over 1.0 million regular session contracts. Unfortunately, that volume transacted over a pretty crummy range, with traders spending the bulk of the session batting the contract back and forth between 2467.50 and 2470.50. As we've been saying on a fairly regular basis, summer auctions tend to be choppy, and for the most part, traders would benefit from a less-is-more type of trading strategy.

S&P 500 Futures -- Daily Volume Profile

Since I've no doubt many of you will be watching Action Alerts PLUS charity portfolio holding Apple AAPL as it reports its results after the bell Tuesday, I thought we'd take a quick peek at the chart.

Apple AAPL -- Daily Chart

For the year, Apple's done a bang-up job. And as long as demand remains strong between $140 and $143 during any post-EPS decline, I suspect the stock's got a date with new all-time highs. As far as a trade is concerned, I'd look for responsive selling above $156.50, but only if prices gap above that figure on Wednesday. I'd only consider participating on the short side (day timeframe) if price broke the opening print and held beneath both it and the developing volume weighted average price (VWAP).

Dip buyers should be glued to the low $140s, and quick to act if price breaks $140 but immediately bounces back above that level. Any longs initiated near $140 could be trailed (with a protective stop) around $137.50, since that level represents the year-to-date lower value area boundary (where 70% of trading has occurred).

Another name I thought we'd revisit is the SPDR S&P Metals & Mining ETF XME. We last reviewed the XME on July 12, when price was breaking above the 200-day moving average. At that time, I mentioned not wanting to be bearish, but also wanting to see a base form above $31 to $32 before turning bullish.

SPDR S&P Metals & Mining ETF XME -- Daily Chart

While we don't have much of a base to trade around, I am increasingly interested in buying a dip toward the 200-day moving average and top side of a prior trendline (noted on the chart above). If I were a buyer of anything between $30.25 and $30.50, I'd expect to use a stop on close beneath the 50-day moving average. Those wanting to give a potential trade a bit more room might consider subtracting 1 average true range (ATR) from the 50-day moving average, and using that instead.

Moving on to Tuesday's Es auction, we'll treat 2469.75 as our opening pivot and look to sellers to auction prices down toward 2461.50 to 2463, as long as we're trading beneath that figure. An open above 2469.75 fails to hold the opening print, and VWAP would be expected to attract day timeframe sellers, with their stops likely being placed above 2472.25 to 2473.25.

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

As value migrates beneath the low 2460s, a path toward 2452 to 2453.75 opens up. If you're an aggressive, momentum-oriented scalper, you'd likely be looking for reasons to sell the market once support cracks near 2461.50.

A sustained trade above 2472.25 to 2473.25 is not something I'd be in a hurry to sell short, since the path of least resistance from there is up toward 2479 and new swing highs.

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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