PCLN Update

PCLN continues to act badly after yesterday's false breakout of the triangle and even on this morning's gap up. There have now been several posts on PCLN and specifically on false breakouts, so far we have a minor FB, we're looking for the more meaningful larger one.

 Here's yesterday's triangle that I suggested would see a false breakout to the upside, it did, that fell. The volume in the red boxes is the way HFTs make money by triggering multiple orders by crossing above and below support and resistance. I said those orders would dry up and a trend would emerge soon, right now the trend intraday is looking pretty bad.

On the daily chart in the first PCLN post, the one thing that bothered me was the lack of a conniving breakout from an obvious zone of resistance-much like what we are seeing in the market today, it did make that breakout. What we want to see is that breakout now fail below the red trendline. PCLN could be a very good trade below that trendline as it would be one of the first major breaks in a very popular stock in a long time. That means there's likely a lot of heavily margined longs and if they are at a loss below the trendline, margin calls will come in and PCLN could fall fast and hard. The price pattern (candlesticks) thus far today, show a confirmed reversal, but I wouldn't call it confirmed until that trendline is broken. It can be shorted here with a stop above yesterday's intraday highs or you can wait for the higher probability trade of the trendline breaks or blend the two strategies.