Shares of online travel company Tripadvisor Inc (NASDAQ:TRIP) gyrated last week after the company reported lower-than-expected top- and bottom-line results for its fiscal first quarter.
Despite the miss, however, TRIP stock last week remained within its well-defined and somewhat curious multimonth trading range. Active investors and traders would be wise to closely watch the stock, for an eventual break out of this range in either direction could set in motion a better directional move.
Specifically for its first quarter, Tripadvisor reported adjusted earnings per share of 32 cents, which was well below the 54 cents from the same period one year ago and below the 45-cent analyst estimate. Revenue of $352 million also fell a couple of percent on a year over year basis and came in below the $371 million analysts had hoped for.
TRIP Stock Charts
Aside from the disappointing earnings report last week, some positive comments were made at the Sohn investor conference, though they didn’t really bring about a sustainable bid to the stock.
On the multiyear weekly chart, we see that ever since TRIP stock topped out in June 2014 after a notable double-top had formed, the trend has been lower. A well-defined series of lower highs and lower lows continues to keep the stock in this corrective phase, which at the February lows had the stock retrace 61.80% (an important Fibonacci retracement line) of the entire move from the 2012 lows up to the 2014 highs.
As such, the February lows saw confluence support from this important retracement line, as well as the lower end of the range of this corrective phase.
After an initial bounce off the February lows, however, TRIP stock began settling into what is a fairly tight and ever-so-well-defined sideways trading range.
On the daily chart, I marked this trading range with a blue box. The lower end of the range is around the $60 mark and the upper end extends toward $68. As a result of this curious multimonth trading range where every dip has been getting bought and every rally has been sold, investors I speak with are increasingly getting frustrated by this lack of follow-through in either direction.
But patience is a virtue, and ultimately this range will resolve in one way or another and provide ample opportunity for the aware traders and investors.
More specifically, a clear daily close below $60 could push the online travel stock back toward the lower end of the bigger picture consolidation phase near $50, while a good daily close above $68 would open up a next upside target in the mid-to-high $70s.
Very simply, the longer the stock remains in this trading range, the more powerful the break in either direction will likely be.
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