Priceline (PCLN) tested a key moving average today. Is the price right?
Discussed in this article: priceline.com Incorporated ( $PCLN )
I want to look at Priceline ( NASDAQ:PCLN ) today. A lot of stocks bounced, they’ve been coming down for quite a while, well it seems like it anyway, its actually been just for a few days; but there were a lot of stocks that rebounded off key moving averages.
As far as this being like a super convincing turnaround, the kind that you just want to grab everything you can with both hands; that’s not really this chart, at least its not to me for a few different reasons.
First of all what you want to look for, what you want to see in a stock that gives you literally like, I’ve got to buy this stock right now because the puking is pretty much over and now we’re going to have a puking rally here. Sorry for that bad visual, but that’s just me.
The first thing that you want to see is heavy volume, I want to see really, really high volume, but that volume needs to be accompanied by a long tail, I mean something that really shows an intraday reversal, I mean the same day reversal. A stock that after two or three days just really smashes down in one day on high volume, and then reverses on the same day.
What that tells you is, that at some magical moment during the day the selling was pretty much over; it just got exhausted. But during the day, I’m not just talking about a gap and bounce. I’m talking about during the day the volume just really ramps up as selling takes over the stock, ultimately kind of crescendos, and then the stock reverses.
That’s a really nice intraday reversal that you look at and say, “Wow, that’s pretty tradable.” I don’t think we really have that here. I think if I had gun to head, thank you no, but I would be buying as opposed to selling right now, because the stocks come down so much its right at a key moving average, but this would really be my trade.
When we’re looking at the weekly chart you can see it’s still really extended, Priceline ( NASDAQ:PCLN ) is still really extended, looks to me like it’s really reversing on this weekly chart, it’s reversing this move, it’s just about swamped this last week and the week before. So it’s really overcome the last two weeks of trading to the downside.
But if we go back to the daily chart and actually look intraday, and I’m talking about a short-term trade here. You can see the daily action, the stock opened up here and this is when it really, really traded down here, volume was pretty high, but it didn’t trade down far enough to really make that long tail that I’m talking about. But then the stock kind of rallied up, as most stocks did during the middle of the day, but then it’s just kind of drifted and fallen lower.
So my point is, even though you look at the daily chart and think, “Wow, this stock, I’ve got to buy it.” When I look at the intraday chart I really see resistance right here, and then of course this is where the stock had closed. I would be more inclined to hang tight on this, if you see another big massive crescendo sell-off, which is probably not likely to happen, because we did get a little sell-off here, just not enough to really amount to much. If we did get a big sell-off then that would be your prime opportunity.
But, I think frankly, the better buy, even though you’re giving up 11 points, would be to see what happens when the stock breaks $1000.00, because this is some really serious resistance here. So you can go ahead and trade this stock if you want, but it’s got to be a really short-term trade. And if you’re going to make a short-term trade I would rather trade on a breakout than I would try to catch the bottom.
But again, the thing that’s really important to remember is just this weekly chart. This stock looks like it has more to go on the downside, and frankly, not withstanding what I just said about buying a breakout, what I’d really love to see is Priceline ( NASDAQ:PCLN ) rally up to like 10.10, maybe 10.20, somewhere in there, and then start rolling over. That would be my key to get a short sale off on this stock. So there are a bunch of different ways to trade this stock.