PCLN Update

I suspected PCLN was making a head fake move, it consummated that move today, but also broke just below its support level. I took out some Puts on PCLN a bit back, but I went to early on the expiration at April, May would have been beautiful.

Most of the damage today in PCLN was on the open, the rest of the day it stayed fairly lateral.

 Here's the suspected head fake breakout move and a break today below the breakout area.

 The 5 min chart for PCLN shows a decent 5 min positive divergence, remember, 3C is suppose to contradict price, that is where the edge is. The very late break below the intraday lows and then recovery back above them is a little interesting as that would draw in a new round of shorts, obviously this is a potential bear trap, longer term though if you can sit through some draw down and volatility, I think PCLN as well as AAPL and many others can be taken anywhere in this area and still yield significant gains, much bigger than what we have seen on the downside. Of course as always we want the highest probability/lowest risk entry and that takes patience and lately nerves of steel.

 Here's the 60 min chart to give you an idea of what kind of damage PCLN has seen. Typically a decline will almost always drop lower than where the divergence first started which would be around the $640 level, however I think there's much more downside to PCLN than just that.

Traders see these parabolic moves up in PCLN and AAPL and are convinced of their strength, when a stock breaks character like this, from a nice steady uptrend to a volatile parabolic move, it certainly can b fun to ride out on the long side, but people get emotionally attached to stocks that have made them big/quick bucks and they are loathe to admit the party has ended and the market will give them a thousand reasons why their point of vies is correct, that's why they typically end up losing all of the gain. In my view, PCLN could very easily retrace to $400 and probably below as longs become sellers finally.

This is one of the most challenging parts of a market cycle, but it's always good to step back and look at the big picture and realize, you didn't miss the bus. In the mean time, I'll stay patient with PCLN and see if the trend of increased volatility continues, if not, I'll gladly take PCLN at $650 and rise it to $400, although in the near term I'd rather be a bit patient and see if I can get in at $725.