I have been watching Priceline ( $PCLN ) over the past few weeks for another opportunity to play for downside - and when I say downside, I mean a $100-200+ move. Such an opportunity presented itself right at the end of 2015 and into 2016, where the stock fell from $1350 to $950 in eight weeks. The major sell signal was the bearish MACD crossover, which has been a very reliable setup over the past 12 months - but the real selling took place when the stock broke under the 200 day moving average. I shared this chart at the start of the year:
Bearish MACD crossover has been pretty reliable indicator on $PCLN ——> pic.twitter.com/4R2SKhBFN1
— Option Millionaires (@OMillionaires) January 5, 2016
And a quick visual on what happened to the stock once it broke under the 200 day moving average:
Fast forward to today and It seems like Deja Vu, as Priceline ( $PCLN ) failed to break new highs, and is now exhibiting a Bearish MACD crossover :
$PCLN continues to be on watch —> pic.twitter.com/ivZtz274wQ
— Option Millionaires (@OMillionaires) March 28, 2016
I think the stock continues to slide, and looks to retest the 200 day moving average.
A few quick reasons why besides the chart:
- Existing and continued Geopolitical headlines/concerns will weigh on travel sector sentiment, just like it did in quarter 3.
- Competition from Airbnb still not priced into the stock; company not even on Priceline's radar till the 2q of 2014 they certainly have underestimated them and think they continue to:
- Hotel Consolidation will bring more focus on 'book direct' and campaigns to get customers away from 3rd party agents and websites - Hotel Chains and Travel Websites in a Tug of War for Customers:
- Google... Do not have time to cover that today.
The stock closed at $1287, and is now only $41 away from it's 200 day moving average. I added puts to play for a move under $1250 this week. If it fails to break the 200 day moving average over the next few sessions, I will close the position. If it breaks below, I will be adding strikes to play for a move to $1150, which should happen rather quickly under $1246.
Happy Trading!
-JB