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Today we're going to look at Priceline ( $PCLN Priceline.com Inc ). I mentioned this
last week in a Free Chart video;
the company announced earnings and it was actually trading down quite a
bit, I think around $730.00, something like that,
in the after hours,
and I suggested, why don't we just kind of hang back, wait,
see if this stock will tag
the 50-day moving average or get down somewhere around here so you can buy it
closer to the mean, the average prices here
and then just be patient.
Well, instead the stock, the next morning opened up,
did not open down, so those folks that were buying after hours were pretty
smart,
those that were selling probably regretted it.
But anyway you can see how much the stock ramped, almost four percent. If
you're long calls
$28.00 is not a bad move.
So what do we do now?
Look, this daily chart shows the stock is being pretty overbought.
You look at the volume, it was massive, the only way a stock moves like
this, with this kind of volume, is when institutions are active and here, because
of the price direction
institutions are actively buying it.
But this chart doesn't really tell the tale for the long run;
this one does.
What I'm really talking about
is
this area right here, it's really important when you're trading, I
don't care even if your day trading, you got to have at least two time frames
that you're looking at, typically four, actually entering and exiting
positions, you should have more than two and my distinction is between
decision and action.
You make a decision
typically based on a wider lens, in other words a longer term chart.
Once you make a decision, yes I want to buy or yes I want to sell,
then you zoom in and look at the daily chart and then even ultimately
the intraday chart. You can start at the hourly,
zoom down to thirty minutes, look and see when the right time might
be to buy then;
keep going down to the fifteen, you can see what happened, it just kind of trickled
sideways,
and then finally the five, and you say, okay, well this is the right time
to buy this stock
and then ultimately even down to the one minute chart to execute it. Now Priceline ( $PCLN Priceline.com Inc ),
not really too good after-hours here, but prior to, you had a pretty nice
move. The point is, not to dissect the price action intraday or even on a
one minute chart; I mean that's kind of silly. Really I'm just trying to
explain to you that
you make a decision based on one chart,
and then you're like a surgeon, you get out the scalpel and you start
doing some really fine detailed work
to make the actual buy. But here,
this is the chart that matters,
if you have a longer time horizon, like between now and next
Wednesday,
this is a stock that you want to own because this little bowl pattern
here.
My bet is it's ultimately going to resolve to the upside.
It seems kind of silly for me to even say eight hundred is probably going
to be tested. The reason is,
because you can see the uptrend. If you just move the decimal point over it's
$76.54
you're not really going out on too much of a limb. When you say, I think the
$76.54 stock is going to hit $80.00. But I would say, I'm
going to say, that certainly eight hundred is going to be tested; but my bet is, because
of the way this stocks trading,
you're going to get nine hundred this year and I think it's actually going to
be pretty easy to do. So
my admonition,
my caveat is
you have to have a longer timeframe.
If you've got a real short time horizon, you're buying the stock up $28.00,
then if the stock pulls back $10.00
you're going to be looking at me saying, "Well thanks a lot for the trade Dan,
really appreciate it."
So I'm saying this is more of a longer term position,
it's more of an investment.
So if you don't have an investment mentality and aren't willing to hold a
stock like this for several months,
then don't listen to what I'm saying here,
because that is exactly what I'm saying, this would be a multi-month
hold.
Start small, if you want, because I don't want you to take such a big position
that if or when the stock does come down to seven fifty or so,
which would basically just put it right underneath
the upper Bollinger Band.
If the stock comes down $15.00 and you get shaken out, then this is not
your trade. So start small
or not at all. Okay members get over to the Weekend Update; a lot of our stocks
have been working pretty well lately.
In the second video
I'm going to go back and cover some of the stocks in the IBD 50
that we've looked at on occasion, as well as some new ones, because there's
some real opportunities there. Okay, I'll see you over there.