Tuesday, 25 April 2017

WFM Takeover Talk is Heating Up Prices

After i wrote this article "WFM, RH, CMG: Bathtub Pattern Developing" on 21/04/2017 (2 trading days ago) about the interesting technical that's developing in Whole Foods Market (WFM), and also its takeover talk.

I decided to enter a trade not just because of the technical, but because of the takeover talk.

In the article, i mentioned name like Kroger and Amazon who maybe interested in acquiring WFM. Yesterday (24/04/2017), WFM prices was pretty flat all morning while the rest of the market popped on French Election relief rally. In fact, it drifted lower all morning. A momentary regret of entering this trade flitted through my impatient mind (a common disease that plagues many traders). I decided to take my eyes off the market completely at 12:30pm and went to watch Roald Dahl's The Tales of the Unexpected (1979 - 1988).

Unexpectedly, at 1:24pm, the WFM spiked higher, reaching $37.26 in the day's high. It appears that FT published an article that Albertsons Cos (a private-equity group that acquired Safeway previously) is considering acquiring WFM. All this happened during my nostalgic viewing of the episode of Lamb to the Slaughter (S1, Ep4). I only find out the news today, after a reasonably good night sleep.

Whole Foods Market (WFM) price chart


It closed at $36.46, which is just a few pennies higher than the lower price gap created on 30/07/2015. Whether it's takeover talk or simply technical gap-fill action that i mentioned in the article, the 1st target is logically $40.50. And the next upper gap price is $47. Credit Suisse reckons they should pay $40 - $45 for the acquisition of WFM.

Also, volumes have been large in all the recent price spikes.

Interesting price action coming up...all aboard!




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