Is the price right on Priceline (PCLN)? Here’s your pre-earnings trade.
Discussed in this article: priceline.com Incorporated ( $PCLN )
I want to look at Priceline ( NASDAQ:PCLN ); they announce earnings a week from today, on the 8th. You can see the stock just stair-stepping higher. This is a pretty easy trade to make.
I don’t really care what Priceline’s ( NASDAQ:PCLN ) earnings, I don’t care if they go out of business or whether they take over the world. The reason is, at least with respect to this trade, because this is a trade that I would want to be out of before they announce earnings. This would be a week long trade, no more than that, you can choose to hold it over earnings and that’s fine, but that’s not what I’m talking about.
By the way, long-term on Priceline ( NASDAQ:PCLN ), look at this; I’ve been talking about this on and off for quite a while, ever since this little bowl here, started to become apparent. This is a nice smooth little turn; this is a long consolidation, basically all of 2012. Look at the Bollinger Bands, they’ve started to drift away from each other, a little bugle there, so I think this stock has a decent chance of getting to a thousand before Google, one of them is going to make it sooner or later. But with Priceline ( NASDAQ:PCLN ) I’m not thinking about that right now. What I’m thinking about is this short-term trade.
Here’s what you do, you look at yesterday’s intraday low, we’ll call it 875.00, so you put a stop just a little bit below 875.00, if the stock starts trading below that level then this consolidation is continuing. So you put a stop at, we’ll call it 874.80, how’s that? You put a stop at 874.80, and then you just hold on to this stock. The stock should just continue to run into earnings.
Now, a lot of things depend on the jobs number tomorrow, I don’t really know whether we could actually ever get a bad jobs number, because the feds just said that they’re not going to do anything until the data gives them permission to, and one jobs number isn’t going to do it. If it’s a bad report, if there’s all these part time jobs, I think traders are going to look at that and say, “Oh good, then our QE eternity continues and we’re not going to do the taper caper, so all systems are go.” If the jobs number is really good, unemployment’s down, full-time jobs are up, it’s all good. Well guess what? I think the market’s going to like that too, because now traders are going to look at the economy as opposed to the fed. The fed has effectively taken itself out of the game in the short run; I live for that.
So I don’t see how we can get a bad reaction to the jobs number. We’re getting a break out here, so I could see traders rushing in to buy this market. I think there’s a lot of managed money that’s been on the sidelines waiting for the dip, it’s otherwise known as a wall of worry, nobody wants to buy. Why? Because they’re worried, what will make them not so worried? Well, the next dip. The only problem is, of course, for a lot of folks when the dip actually occurs you back away. Why? “Oh, there’s something wrong, sure glad I didn’t buy before.” So you don’t really swoop in to buy like you should. So we’ve got money-chasing stocks, I think the market continues higher.
With that said, if the market does have a negative reaction to tomorrow’s jobs number, I’m not predicting anything, I’m just telling you what I think. If the market has a negative reaction to the jobs number, then you can consider this break out to probably be a fake out, and maybe we’ll get a little more of a pullback. But I’m getting ahead of myself, with Priceline ( NASDAQ:PCLN ), as long as we don’t get a major dump in the market tomorrow, I think you can see Priceline ( NASDAQ:PCLN ) up to, I’ll take a shot, 940.00 in the next week or so.