I've liked PCLN as a short for awhile and have mentioned it several times. Time to take another look. First of all, PCLN was a POMO darling, one of the stocks that was chased by leveraged margin traders, thus in my opinion, it has a lot to lose. PCLN s trading at a P/E of 42.89.
This weekly chart shows volume expanding on the rise from 2005-2008, as it should in a healthy stock, but look how thin volume has been as it has traded in the QE era from March 2009 -2011. Not only has the price action been parabolic, but on low volume, it just shows that PCLN has been largely manipulated higher through the QE era.
MACD (I use a long version to cut out noise) went negatively divergent at the top and has continued to make lower lows with price.
Daily 3C went negative at the top and has traded in line with price since.
The 30 min chart has a negative divergence
As does the 15 min chart
And the 5 min has looked horrible even when other stocks and averages have looked much better,
it seems that any price gains lately have been used for distributing this highly leveraged position.
My trade screen for avoiding false/whipsaw crossovers has been on a sell signal and remain there.
The 2 day trend channel caught the entire move of 152% without 1 false stop out, the current short trade stop is at $507 which is about 4.5% higher, I can live with that in my risk management planning.
I know it's an expensive stock, but we are looking at the % gain you can make with your money. I'd rather have 10 shares of PCLN then a 1000 shares of a stock that doesn't have the same downside potential.
Just an idea for you to consider.
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