PCLN Follow Up

The trade plan for PCLN has been based on an expectation that the $1200 level which is a new high, a centennial number, a whole number and otherwise major psychological magnet would be broken on the upside as we aren't far from it. Out of the 7 positions in the trading portfolio in to the F_O_M_C, PCLN was the only short because of the possibility of things going the other way on the knee jerk, but as more and more evidence of short term trade mounted, Tuesday I closed the short for a small gain and "thought" or intended to open a long, this was a fat finger (not enough coffee) trade that just opened a new short which I promptly closed yesterday once I realized what I had done. The Call position in PCLN was opened earlier in the week when I first intended to hold PCLN short, it was a hedge position (even though it wasn't in the same portfolio so really not an effective hedge for me, but this is not for me, it's for you.

Truth be told, I should have taken profits on the call position yesterday in to upside momentum.

Here's the P/L for the calls and the charts for PCLN which I'd still like to see move up a lousy 14 points and take out $1200, then I'd be looking for a new entry or add to entry for a longer duration core short as well as a trading position short.

 The PCLN call would have MORE than served its purpose as a hedge and left some upside gains to boot.

The $1200 area hasn't been hit yet, conceptually this is the highest probability set up, but we are moving further and further away from normal concepts as the market's skew and internals (new highs/new lows ) as represented by indications such as a cluster of 5 Hindenburg Omens shows this market is not at all what price alone makes it appear to be.

Conceptually as far as a reversal process goes, this is near text book and a move >$1200 would be the chimney or head fake move (which is a broad category for a number of different deceptive traps, in this case a bull trap).

I have mentioned recently that the market is starting to act more like a market and less like a Bernanke Put driven brainless/thoughtless exercise. I'm still trying to figure out how this plays out, but I know one thing for sure, when the crowd is boastful over something that takes ZERO intelligence to follow, the market has a way of humbling you very quickly and very sternly,

The consistient way to outperform the market over the long haul and that's what we are all in this for, not to make money for a few months and retire, YOU HAVE TO FIND THE THING THE CROWD MISSED AND THERE ARE A LOT OF THINGS THAT THEY NOT ONLY MISSED, BUT WORSE YET CHOSE TO FLAT OUT IGNORE, THEY'LL BE PUNISHED FOR IT AND I DON'T GET ANY SATISFACTION OUT OF KNOWING THAT, BUT THIS IS A ZERO SUM GAME, SOMEONE HAS TO LOSE.

Like Warren Buffet said, (paraphrasing), "When you sit down to play poker, if you can't figure out who will be supplying all the winnings (the loser) within the first 5 minutes, then that person is you".

 1 min chart's trend, lots of stuff here from a negative to in line to a positive with a head fake move just before a parabolic launch yesterday, distribution today and the $1200 level just a tiny bit away.

A closer view of the 1 min

A closer view of the 2 min and head fake move, there were a ton of these yesterday about an hour before 2 p.m. which is another reason I chose to go long TQQQ, sounds counter-intuitive doesn't it, price breaks support and you go long on that move, that's because a head fake move is one of the best timing indicators we have, the "fake" part of the move can pretty much only be determined by the divergences.

The 2 min in context.

Remember that typically a 1 min divergence means a correction and that can be a 50/50 chance of being through time like a price pattern or through price like a pullback, when the 2 min chart is added, the pullback becomes much more probable, so letting the options stay open is against the short term probabilities.

 10 min, from confirmation to distribution which is leading negative even with yesterday's 3C move.

This is where the highest probabilities are. If PCLN makes it above $1200, this chart alone already says the probabilities are highest that the move turns out to be a failed breakout or a head fake, but we always try to confirm that on as many timeframes as possible, if for nothing else other than timing.

Hold tight, this is a beauty, if you're in, I would not sweat a move +>$1200, if you are not, I call these moves, "Gifts".