"However, as I said, "I don't believe Wall St. does anything without a reason and they saved this cycle when the NFP Friday morning threatened to send the market lower as the good employment report makes F_E_D tapering more likely, at least that's the market's (retail's) take. To me it seems setting up and seeing through this mini cycle through the NFP'd (Friday morning volatility) shows some commitment to the cycle, even though all indications are that it's a "Mini" cycle.
This is one of the reason I said on Friday that I like PCLN as a core short, but I wouldn't be interested to add to the position unless it made a move above $1100 and to do that, the market would have to make a head fake move above the range above, the more defined and obvious the range, the more likely it is to be hit and shaken out, there's too much money, too many orders, too many volume rebates to leave all that money on the table. However, that's just my speculation."
Yesterday I received an email from some members that are very experienced traders and had essentially told me (since I don't /won't watch CNBC), what Cramer was up to last night (what follows is my response in regular italics and today's chart comments in bold)...
Member:
" Jim Cramer went on for a 10 minute special how PCLN is actually the “least expensive” growth stock ... had a great quarterly report ... picked a great CEO ... and recommended people buy deep in the money calls “because the stock is expensive for some people”.
My Response:
"I suspected PCLN would do this, but it was more based on instinct or market behavior, that FLAG-LIKE AREA FROM AROUND 10/22 (60 MIN CHART) to about 11/6 was just too simple of a channel, too easy to head fake and run because traders were expecting that from what they view as a large flag.
"The final straw for me was the break below the channel on 11/7, that's a channel buster and whenever you see them, they are bound to reverse the exact opposite way of the break or channel bust, in this case it was clearly below the defined channel "
We have an upside Channel Buster that quickly sends price through the bottom of the channel, then a strong reversal to the upside Monday, this is the Channel Buster and how they work.
"So what you said about the big run up on Monday, it was a direct result of the channel buster the day before.
This was more than likely set up in advance, it would take a week or so to accumulate even a small position like the move we are seeing now, you can see on the next chart where the two breaks were accumulated, but it's the channel breaks that create the momentum they need without them investing money to mark up the stock.
So is it probable that Goldman Sachs Alumni, Cramer was part of the catalyst to send PCLN higher off a momentum producing "Channel Buster" AFTER there had already been accumulation just before the move up? Well I can remind you of the week Cramer told his audience to buy USO on the next bad EIA report as a contrarian trade (how millions of viewers all doing the same thing is contrarian...?) this was the same week we called the top in oil around mid July 2008, after the Bush oil run from the mid-tenns to the mid $100's.
It's not a huge amount of accumulation so I don't think it was meant to last as long as what Cramer is trying to sell, but they don't need that and they know it likely wouldn't hold that long.
The "Cramer Effect", just everyone buying tomorrow is another free bit of momentum like the channel buster so you are probably correct that this is all connected.
I wouldn't short it immediately, although it will be interesting to see how much pump the Cramer effect still has after he spent so much time on it, remember that first and foremost Cramer is Goldman Sachs alumni and that's his most powerful card so his loyalties are first and forever with them, if CNBC lets him go, GS will always be there for him-look at the leaders of Greece, Italy, the ECB- ALL FORMER GS EMPLOYEES.
The distribution in PCLN makes sense that they'd try to push it higher, whether to get out of long exposure, to short or both, they need demand and that's what Cramer is giving them the night after PCLN already showed the sheep it can move (before Cramer mentioned them).
Daily
60 min
"We'll see distribution start and know we need to start paying attention to an entry area.
I'm really interested to see how much oomph the Cramer effect has left considering margin/leverage" levels."
_________________________________________________________________________________
And that's the end of the email response.
Surprisingly the Cramer Effect was or has been thus far, very mild. I don't watch Cramer, I don't know what he's pushing or pumping, I just know that the day after he pumps, especially that hard for that long, retail usually responds. I see about a 1/2% gain with a potentially bearish/reversal "Daily" candlestick set up.
As far as the head fake set up that I'd expect...
The red arrows show what some technical traders would take to be a bullish "Bull Flag", however in actuality it is too big or pretty darn close to too big. Traders would expect a bull flag to breakout to the upside above the flag which it did yesterday cleanly BEFORE Cramer started hyping PCLN. The Channel Buster in Yellow is on increased volume, that's part of the reason for this version of a head fake move and it's that little trap that is set that helps the upside reversal momentum.
It seems the Cramer effect has been quite muted, but I'd expect any head fake set up to target the area above the yellow trendline which is one of the reasons I said I wouldn't consider adding to PCLN unless it was above $1100.
As for what has happened today...
First I wouldn't expect that the accumulation cycle seen above on a 2 min chart could be distributed in the 2.5 days since there has been an opportunity, but it's also hard to know how much was actually accumulated and for what reason, (to buy shares and sell a few percent higher and perhaps short in the head fake range or maybe just to give PCLN enough support to break in to the head fake range to do nothing more than to sell short? It's difficult to say what the reasons are for what we see at the time).
And intraday it looks like the 3 min chart is getting intraday support to perhaps try pushing it higher.
As I told our member who is really paying attention to this one, "I'd wait until distribution of the recent accumulation at the channel buster lows is VERY clear, PCLN is in the range, the area, it's probably not a huge deal if you entered here or at the exact area of a reversal, maybe a few percent, but it will be clear when distribution of that accumulated area is done. I'm guessing it would take several days, maybe a week to go through all of it, depending on price movement and of course volume.
I would have PCLN on the radar though. Remember AAPL had a similar type of divergence that I was trying to trade around and got caught without a seat when they all got run over.
The daily chart is what is ugliest about this right now.
First we are above the resistance range, buyers are not stepping in aggressively and that's the point of a head fake above an obvious range. Yesterday's closing candle has a long upper wick showing higher prices were rejected and there may have been some churning up there. Today's candle, even with the Cramer Effect has a VERY small body, if it were a bit higher it would be a bearish reversal pattern called a "Hanging Man".
I'd keep this on the radar, 3C or not just because of the AAPL effect. I'll set price alerts.
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