PCLN Update

PCLN is a partial Core Short that is waiting to be filled out. Yesterday's update was "Will Wait on PCLN" the reason why?

"As everyone here knows, I'm not a big believer in sudden reversals or "V" reversals and considering the daily chart in PCLN... With this candle-if it holds in to the close, I'd have to expect a pretty tight "V" reversal and reversals just aren't (or VERY rarely are) events, they are a process. I'd think at least 1 or 2 days maybe to form a reasonable reversal process if it started tomorrow"

There's a lot more including a Trend Stop out level in the post from yesterday so I'd take a look at it if you are interested in PCLN.

Thus far today, the daily candle in PCLN is just as imagined and so far perfect, another star/Doji in the area with a bearish confirmation candle would give us an appropriately sized reversal process rather than a "V" shaped event that is very rare.

The charts for today, so far so good.

 PCLN Daily chart. As you can see in the last few PCLN updates, I have said I would not consider adding the other half on the core short (as this was planned to be a phased in position) until PCLN broke OVER $1100, and the reason for that was behaviorally from the market, the range in place suggested the probabilities were for such a move, but likely a head fake move/bull trap.

For longer term analysis, see previous updates.

Yesterday's large, bullish candlestick was VERY unlikely to just reverse down today no matter what 3C says, it's too tight and no reversal process, there's a reason for the process and why "V" reversals are so uncommon.

Today's star is a near perfect second day candle, one more would make the process a little wider and a bearish confirmation like a bearish engulfing candle would round PCLN's reversal process.

This is what we were looking at and talking about in the IWM as well, a downtrend and then a channel buster on the upside that looks bullish, but it creates fast downside momentum which slipped below the lower channel and created another channel buster that looks bearish, but this we'd expect to move up quickly (remember that when looking at the IWM's).

In yellow we have the bull pennant and 45 minutes before it broke out I posted the intraday charts suggesting it would and the longer term charts suggesting the breakout would ultimately fail and become a head fake/bull trap.

In green is yesterday's breakout which moves above the recent intraday highs range, that's the target and why I wouldn't enter before PCLN was >$1100.

 This is the entirety of that process since the Channel Buster and now we need to see the right side of a rounding top or another similar top pattern.

The intraday charts were negative already at the bull pennant and the breakout after it, even worse today which is what we look for to identify a head fake from the real deal.

Intraday on today's star we have an intraday negative which is perfect, typically on the 1 min only it creates a lateral consolidation, at the 2 min the probabilities of a pullback go way up, I would prefer we range laterally in this area for another day or so, the 2 min chart is negative, but not that bad so the changes of another star/Doji in this area are good and that gives us a more proportional process as they tend to be proportional to the preceding trend or their trading character.

So, I'm not making any moves in PCLN yet, but what we hoped to see yesterday did develop thus far today.

Another day or two could be the sweet spot to fill out the rest of the position.

I will say that I am being very myopic when you consider the bigger picture, but that's my job. For those who prefer more confirmation, the break of the Trend Channel for the entire 2013 trend is in yesterday's post linked above, the area is under $1018 on a close. While this probably wouldn't be the best/lowest risk entry, it would certainly have undeniably high probabilities.