Name your price on Priceline Group (PCLN) (November 09, 2015)
PCLN SP-500 PCLN
Priceline ( NASDAQ:PCLN ), they reported earnings, actually not that bad, I think they beat, but I think they guided a little bit lower. You can see what happened to the stock, it fell; Oh my gosh! It fell 143 points. Well, actually just 10 percent, it’s an expensive stock. We’ll see this from time to time, it’s always risky to hold Priceline ( NASDAQ:PCLN ) over earnings. Though, if you’re well heeled, and you own the stock, that’s great! It’s 10 percent down, you can recover from that. If you, on the other hand, were trading options, like lets say you were short puts, that wasn’t working out too well for you. If you were long calls, well, Hey! at least you defined your loss, it was 100 percent. So the stock is a real anaconda, you don’t want to be wrestling that thing.
Here’s what I would suggest doing: look and see what’s happened when the stock is traded down to the 200-day moving average. It’s bounced, pretty decisively. This was a BIG “pukefest” here, the stock is now above the 200-day moving average by 6 percent or so. I would actually say, if you are buying now, that’s really your downside. You’ve got about a 6 percent risk, so if you were to set your stop just a little bit below this 200-day moving average, although then you’d probably end up setting it a little bit below 1200.00 because it’s an even number, and that’s just kind of where stocks can tend to trade. And you would want to set it below because guess what? There will be a lot of folks have stops at $1200.00. Those stops get triggered, the stock cascades lower. So it’s a pretty risky deal.
What am I saying? I’m saying this, “Yes, you can put your stop down here.” Basically you’re risking 10 percent or so. Even then, and I am leading up to something, even then, lets say you say, “Well, I’m going to put my stop clear down here.” Great! That’s at this low here. And then, “Oh! Well I’ll put it a little bit lower, so I’ll take it down like this low, 12 percent.” Yes, well that’s here. The bottom line is, this is a stock that you just can’t buy it to put a stop in. It just doesn’t lend itself well to that. What you want to hope for, hope isn’t a method but it’s often used by traders, you want to hope for even more of a pullback. You’ve got two big downdrafts here. You’ve got two big ones here. And then finally a bottom on the third day.
The S&P’s kind of weak, you’re probably going to see, hopefully, more downside tomorrow. I love it when markets go down because then you can buy stuff cheaper. But hopefully it goes down another day. The closer you can get it to the 200-day moving average, the better off you are, because the lower your risk is. So you want to be buying it as close to here as you can. Then once you’re down here, now you’ve got a reasonable risk and then you hope for a rebound. Because again, they kind of under promise and over deliver. The holiday season is coming up, so I would look to buy this on weakness. We just don’t know if there’s going to be further weakness.
Free Chart