Use mathematics to trade TripAdvisor (TRIP) (October 15, 2015)
TripAdvisor ( NASDAQ:TRIP ). Here’s what I want you to look at: Bollinger Bands. This stock gapped way up and held the gap in response to a deal, the market’s response to hearing about a deal that they’re doing with Priceline ( NASDAQ:PCLN ), so some of Priceline’s bookings can be done through TripAdvisor ( NASDAQ:TRIP ). It’s a big deal for them. I think they’ve been trying to get this thing to go through for a while, finally did it. This was a good short and a good long. It was a great short “right out of the gates” yesterday and then kind of a good long after that.
But now I’m telling you this, you don’t want to be long this stock. Bollinger Bands expand to capture price. About 90 percent of all closes are within the Bollinger Bands on two standard deviations; and this is what these are, 20-period moving average, two standard deviations, so these are two kind of 10 percent days. Now, if we switch this to three standard deviations, now it’s supposed to contain about 99 percent of the price action. Just barely, BARELY, this stock is back within three standard deviations, yesterday it was above.
My point is this, from a mathematical standpoint, just as a function of math, this is not me being some amazing chart reader, I’m not using Fibonacci stuff, certainly not using “Elliott Wave religion” stuff. I’m just looking at the math. This stock is going to have one heck of a time going higher. I don’t think the short interest is high enough to where this is going to be a short squeeze that’s going to continue to go. Right now, Yahoo Finance has 14 percent of the float short. That is not a big short interest, it’s just really not. It takes about eight and a half days of trading to cover.
I’m just telling you, if the short squeeze was on, that was on yesterday, I just don’t think this stock is going to move up any higher. So if you are long I want you to really consider taking profits. Because the path of least resistance here is lower, not higher. If you insist on remaining long, that’s fine too, because I could be wrong, but at least keep a trailing stop on you position. I don’t want you holding this. If the market kind of rolls over and the next thing you know TripAdvisor ( NASDAQ:TRIP ) is down to $74.00, now you’re wondering whether you should sell it or not. So use the math in your favor and be reluctant to hold a stock that’s gone up this much.
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