PCLN Update

So far our short trade on PCLN from May 3rd is working out well. So far we've taken about 40 points out of the trade. However.... complacency is not our friend. Although the trade still looks good and longer term I think we have a lot of potential here, there are some short term areas coming up that we need to keep an eye on.

 Here's our entry on a move that turned out to be a small bulltrap. The first zone of support has broken, the next zone is upon us now, after a break of this level, we should see some downside momentum pick up. Remember that lower trendline...

 Here's that lower trendline on a 1 min chart toward the end of today. Notice the very brief dip below support which ramped volume up, shortly thereafter we saw a high volume bounce back above the trendline, these are the common games Wall Street plays. Most traditional traders would have stopped out of longs at the break of that trendline while others would have had limit short orders on it.

3C revealed a positive divergence on the break, so in essence, Wall Street stole a number of shares on the cheap. We need to pay attention to what they do with them at this point. It doesn't look like they distributed them into the close, but that support line provides them with a lot of leverage over tradition technical traders. A clean break below the trendline and the short position should be great, however there's a probability that we'll see more of this dipping above and below the trendline as it's a popular stock and an easy support line to spot.

If you're in this trade, keep in touch and we'll see if there's anything to this small bounce.