Trade Set-Up: PCLN

PCLN is one of the watchlist stocks that looks great; it was part of the September 16th Short Sales Asset Watchlist in Here they are... with the note including some upside pice alert target zones...

" ...Just looking for the right bounce... Last night PCLN was mentioned in the Daily Wrap as a likely bounce candidate for today based not only on the wider expectations, but the hammer closing candle on higher volume.

> $1175, $1185, $1200, $1220, $1230, $1240, $1250"

PCLN did bounce off the 15th's hammer and came right back down to the long term top/H&S neckline as it was one of the many smaller counter trend bounces seen in this morning's charts of SPY/IWM, "Lower Highs/Lower Lows".

This Sept. 11th post, Trade Idea / Trade Set-Up (long Term) PCLN gives you a wider perspective of PCLN's BIG picture and just why it's such an interesting short sale on a bounce which I think it's a,bout to attempt again, however this time if it has a little market support, some of those better entries listed above may be in play.

I'll leave the longer term charts for the post linked above and just kind of catch up to where we are now.

 This is a 2-day chart just to show the stage 2 mark up in 2013 which was a gain of +87% and the stage 3 H&S-type top, with a loss on the year of -0.33%, essentially flat, that's your change in character in the trend, that's the stage 3 identification and it's pretty low in the top, meaning it likely doesn't have more than another bounce in it before it break below the neck line and transitions to sage 4 decline.

The longer term 3C charts linked in the September 11th post show the very high probabilities of PCLN losing a lot of ground in stag e 4 decline, which is what makes t attractive as a core short position or trending trade.

 Here's a close-up of the neckline, Ou=r September 11th post identified an area of support coming in to play which was September 15th and the bounce from there which was covered September 16th, although it didn't get far.

Again, today, like September 15th, we have another "Hammer" candle showing short term support right at the top's neckline, a perfect place to bounce and that bounce being a perfect move to short in to price strength/underlying weakness, although I'd like to see some of our upper targets hit and I think that's a higher probability now than last time.

 The 15 min chart shows a lot of distribution signals through the downtrend on slight price strength carrying PCLN lower,  however what I'm trying to point out with this chart is there is no strong or any positive divegrence on a 15 min chart, thus any upside doesn't have a lot of support, meaning I wouldn't have any fear that PCLN is somehow going to crawl out of the grave and come back to life.

 The 10 min chart however, does show the last positive divegrence and hammer support at Sept. 15th and currently, thus a little larger divegrence and hopefully a better entry closer to the >$1250 area.

 The 5 min chart is simply a bit more detailed and shows the two divergences as 2 separate areas, as the previous bounce failed, but it does look like a stronger overall position to bounce from.

Intraday the 1 min chart looks like it could pullback a little,  this would only be useful if you were trying to piggy back PCLN's bounce on a short term swing trade, however while you could do that and enter the larger play, the short position on a bounce, the higher probability trade by far with a lot less risk and a lot more profit potential is the short entry, although I think both can be played , but I'd want to try to time any long entry for a short term swing trade with the broader market as a whole as we have been talking about for this week going in to Q3 on Wednesday.

Overall I think this is a pretty good spot for a long piggy back entry, for a call position I'd want to see a more dramatic pullback which is a coin toss looking at the intraday chart.