PCLN Update

PCLN has not been on the market's clock, it has not been on the same cycle as the market which is rare, in fact it has almost been on the exact opposite.

I'd love to see a bounce in PCLN to add to a position started some time ago, however I'm not counting on it. From a larger trend perspective, although PCLN is not at one of my favorite areas for shorting the stock, and while I'm really not very interested in chasing a move down of 2.84% today and -9.19% since the market's cycle transitioned from a stage 1 base to stage 2 mark-up on 8/11/2014, I will say that in the big picture of things, PCLN is still in a great area for the long haul.

The weekly chart of PCLN doesn't show the top pattern as well as the daily, but it does show the large negative divegrence in the oscillator  as 2014 has been a range (top) which you'll see below.

 In fact for the year, PCLN is only up +4% vs 2013 with a nearly 100% gain which should speak volumes itself.  

If you wonder as I'm sure many do, how it can be that market breadth as recently as the first week of August was at such a low level that only 20% of NYSE stocks were above their 40-day simple moving average around the same time the SPX is making all time new highs, all you have to do is look at stocks like former momo darling PCLN, the hard numbers don't lie, they aren't an interpreatation of an indicator. There are more stocks in this position than the market averages would indicate which is a very dangerous situation for anyone long anything market correlated like equities in non-defensive sectors.

 As recently covered (maybe I'll put up a link to properly using the Trend Channel which is the first custom indicator I won an award for), the Trend Channel is meant to be an objective stop indicator that keeps you in the trend until something changes and changes in character lead to changes in trends. The Trend Channel would have kept you long PCLN for nearly a 100% gain. As I said, a stop out in the TC doesn't mean there aren't additional gains to be had, it means the easy money, the trend is over and something else is about to emerge, which did in the form of a H&S-type top with a downside (moderate) target of $800.

 Here's the long term 3C chart during the top area through 2014 showing clear distribution, considering a nearly 100% gain the year before and a 4% gain for 2014, it's obvious there has been a significant change in character for PCLN and in the context of staging this trend, it is still stage 3 top with stage 4 decline not far away, I'd estimate PCLN will enter decline around $1140.

The hourly 3C chart shows confirmation of the last reasonable up trend in PCLN and a distribution cycle that has lasted nearly a year which would not be uncommon for a stock that has been in stage 2 for approx. 5 years coming from the mid-$50's.

 This shows the market's base from 8/1 to 8/8, at the same time PCLN was making a head fake high with severe distribution in to it, which is odd as most stocks will follow the ebb and flow of the market. I suspect this is another sign of relative weakness in PCLN.

There's a very small 2 min positive divegrence so you may want to set some upside price alerts for an entry or add to, but I would not be too concerned about over thinking this or waiting for significantly higher prices, I don't think we will see them.

I'll set some alerts as well just in case, but already have an open position from earlier in the year.