For Those PCLN Hunters

I had been saving this one until it was in a more advantageous set up, instead of waiting to call it out as a Trade Idea, I thought I'd give you an example of "Why you don't need to chase".

Every stock has different relative performance, this means, especially in PCLN's case, that it's going to be an entry at a different time than most stocks or the broad market in general. I'll show you what I mean about Relative performance in this context.

Lets just jump in to the charts...

 First off, we are seeing a lot of H&S tops that are right at the top of their right shoulder, the next move from the current position at the top of the right shoulder is down which fits with market expectations as they were put forward Friday.

However, PCLN's relative performance vs the SPX has been poor, from 5/29 to 6/10 PCLN did - 5.33% while the SPX did + 1.68%, that's a differential of over 7 % in the wrong direction. However, after examining the charts a little more closely, it seems there was some premature decline in PCLN, I'm not entirely sure why, but it looks like it will offer a better entry which still isn't bad here, it's just at least 4% off the optimal and perhaps even more off what will become available.



This is a quick custom cumulative volume indicator to make it easy to spot volume trends during rallies and declines and confirm a H&S top. At #1 volume fell off hard in to the highs, this is typical of a H&S, but just before it had been moving up and if it maintained that, it would be shaky calling this a H&S top. At #2 and #3 volume increases on the decline to the neckline which is what we want to see and at 4 volume declines on the right shoulder rally which is one of the most important areas for volume confirmation, once you are on the right side (decline) of the head, volume plays an increasingly more important role.

As far as breaking the trend, this is my custom Trend Channel I've won awards for, basically it won't take us out at the top. but tell us when the trend is done and the easy money is done.

The trend was held very cleanly without a single stop since the start of 2013, but it stopped out at the red trendline, this doesn't mean an automatic reversal, it does mean the probabilities of the trend continuing are VERY low.

This is the right shoulder I mentioned, note today's positive candle in an ugly market with a +1% gain, like I said, this is one that is not following the market's relative performance and thus it will be ready in its own time which shouldn't be far off, but still, there's no reason to chase any asset lower on downside action like we saw today. THERE ARE A LOT OF OPPORTUNITIES OUT THERE.

 I was looking at how sharp this multi-day 3C chart dropped off so I compared it with TSV, although 3C almost always has more accurate signals than TSV, I just wanted to see. As you can see TSV does not drop off as sharply, but does drop off and is in a leading negative divergence.

There's more...

The Trend version of 3C which eliminates most smaller signals and a lot of noise also drops off considerably around the same time, looking at intraday charts, it looks to be accurate, the point would be, distribution in PCLN took on a very serious role over the last year and we know for sure Institutional traders have been net sellers for more than the last year from the BAC material.

 A daily chart of PCLN has the same wicked drop-off/distribution, so strategically, PCLN looks like a monster short, it's all about the tactical entry now.

 The 4 hour chart during the H&S top, exactly what we want to see and very similar to other assets like NFLX that are in the same pattern and the same place.

 This 60 min chart of the right shoulder looks like distribution was fast and heavy, but it was very poignant and in a shorter period than usual, volume was higher in the area as well

 The more detailed 30 min chart shows the same, as well as the positive divegrence that created today's relative strength, this is why I haven''t put PCLN out yet, I was expecting a bounce that could be shorted in to, tactically it doesn't look to be ready, at least not as close as we can get.

 The 5 min chart shows all the same trends from quick distribution to a positive divergence , so I think PCLN bounces a bit and gives us a better entry, although I would not consider this a bad entry when looking at the bigger picture.

From 3C and BB's, I'm setting alerts above $1250 to $1325, I suspect somewhere in thre distribution will kick in and we'll have our short entry, you may want to set alerts if interested.

The downside target looks to be about $775