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Is Priceline.Com Incorporated (PCLN) Booking A Trip Lower?

 December 27, 2012 11:18 AM
 


(By Rich Bieglmeier) As priceline.com Incorporated (PCLN) approaches $600, twits for the online travel company have skyrocketed by 1,157% according to StockTwits.com. Pretty much all the commenters are focused on the NASDAQ 100 member's stock chart and technical state of PCLN.

A tweeter with the handle Silver writes, "$PCLN @ 580 will be very ugly unless you are making millions with puts! LOL $$$$$" Another, named Gh0stTrade515 added "$PCLN needs to hold 600 period."<~IMHO $600 is irrelevant aside from psychological. Already broke trendline to downside Bearish." And, there are 100s just like the two examples above. iStock was hard-pressed to find any bulls in the crowd of bears.

[Related -Priceline.com Inc (PCLN): Goldman Says PCLN Is Booking A Trip To $1,500]

Thankfully, we aren't limited to 150 characters here at iStockanalyst.com; so, we'll take a crack at the online travel giant's stock chart, too.

While $600 may be psychological, the round number does offer up minor support, but not enough to hold up much weight. If a bunch of fat sell tickets show up, it is doubtful that six-bills have the technical muscle to stand tall.

Since the start of April, PCLN has been stepping down a little at a time with a floor in the neighborhood of $560, which the stock flirted with in late October and early August i.e. a double bottom.

In the last couple of days, priceline has violated its 50-day moving average, had its MACD line fall below zero, and pulled the 13 and 39-day moving averages within inches of bearishly crossing under the 50-day, too. Yesterday's $15 fall opened the trap door and put shares into an express elevator shaft created by an early November gap up. On November 1, PCLN closed at $586.10, opened on November 2 at $650.06, and closed the 2nd at $ 634.74. Shares backed up since and put a floor in near $610, and that door opened yesterday.

[Related -Priceline.com Inc (PCLN) Inc Q3 Earnings Preview: What To Watch?]

Eventually, PCLN's price can work its way back to November 1st's close of $586. However, at the moment priceline.com is on the verge of being oversold. The price is more than one standard below (20 day volatility) its 20-day moving average. At times, the stock has moved as many as three standard deviations below the 20-day, which would put another floor at $580ish – starting to see a pattern here yet?

If the fiscal cliff and debt ceiling put tons of selling pressure on stocks and Captain Kirk price bust $580 for PCLN, then a third trip to $560 comes into focus quickly. After $560, the express to $525 is scheduled for departure. If $525 doesn't hold, then shares could bypass the next psychological floor of $500 and go directly to $475 without collecting $200.

For now, iStock thinks $580, should the stock get there, could offer investors a short-term buying opportunity. Downside could be limited to $20 (3.44%) with a double bottom at $560. If shares close below $560, investors could consider a double stop. In other words, if you bought 100 shares, selling 200 shares and taking the short position. Closing below $560 could be very dangerous for priceline.com Incorporated (PCLN) shareholders, as we outlined above.

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