Market Overview

Priceline And Expedia Have Hit Their Tops

Related PCLN
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Priceline Finds Resistance After Rallying Off Solid Expedia Results
Using Reversion To The Mean To Gauge Total Return Expectations: A Portfolio Review (Seeking Alpha) Inc (NASDAQ: PCLN) and Expedia Inc (NASDAQ: EXPE) have topped out. These will see at least a 10% pull back in the coming months as reality sets back in. Just last week, Priceline reported earnings that beat expectations on both earnings and revenue. However, they warned for the coming quarter. The market initially ignored the warning, sending shares as high as $1,333.12. Reality is now setting in.

1. The stock opened sharply higher after earnings and fell the rest of the day, barely squeaking out a gain following earnings.

2. Today, the markets are having a solid rally with the Dow Jones Industrial Average higher by over 150 points. However, Priceline is barely positive. This shows relative weakness and should spell significant downside on any market pull back.

3. Sister company Expedia shot higher in early trading this past Friday. By the end of the day there was classic topping tail, a major bearish signal. Today, the stock is red on a green day.

Ultimately, these stocks are run too far, too fast. They will pull back and I have shorted Priceline (PCLN). Enjoy and profit.

Gareth Soloway


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