Priceline: A Monster Rally Needs a Breather

The stock price of online travel booker Priceline (PCLN) has displayed some wild swings during its nearly decade-and-a-half of existence. Priceline stock peaked out at $990 in April 1999, but last Friday — some 14 years later — PCLN finally retested (and actually marginally surpassed) the $990 level.

Of course, plenty of stocks take a long time to recapture all time highs, and in fact, some never recapture old highs. What’s so nutty in the case of Priceline stock, however, is that for roughly half the time of this 14-year time span, the stock traded below the $40 mark, and as low as around $6. If we take an average price of that seven-year period — somewhere around $20 — the recently retested price near $990 is fifty-fold the $20 mark.

That is one wild swing, regardless of it all taking place over a 13-year time frame.

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The most recent spike in Priceline stock came following the company’s latest earnings announcement after the bell Aug. 8. The next morning, PCLN jumped 6.5% at the open on big volume, only to close the day up less than 4%.

In other words, the $990 high from April 1999 was surpassed on an intraday basis, but not on a daily closing basis.

Somewhat troubling for bulls in this stock is the waning momentum with which it has ascended since June, though granted, this is a phenomenon we are seeing across the U.S. stock market.

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In the immediate-term, Priceline stock would do well to consolidate last Friday’s spike somewhat, which is to say that I am not in the camp of chasing the stock higher right here right now. Healthy action as such would included a closing of the up-gap from last Friday, i.e., a retest of the breakout level near $935. From there, the bulls will want to see some backing and filling to form a tighter base, from which PCLN can move higher again.

Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free Weekly Market Outlook Video here. As of this writing, he did not hold a position in any of the aforementioned securities.

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