Priceline Group Inc (NASDAQ:PCLN) joined the rest of the market in suffering through volatility in the second half of August, and came under pressure. But in the bigger picture, PCLN stock has held up much better.
Priceline continues to grow steadily, but yes, a slowing rate of growth for the broader economy will likely also impact PCLN. Still, Priceline shares’ 18-month consolidation phase should resolve to the upside.
Given Thursday’s big Federal Reserve interest rate decision, which will be followed on Friday by quadruple-witching options expiration, this is a good time to research and build a wish list of stocks to buy on their next dips.
PCLN stock has been on my radar all year, but the tight sideways range followed by a quick pop ‘n’ drop in August just never made Priceline a compelling enough candidate to pull the trigger on.
So the waiting game on Priceline stock continues, but I remain as interested as ever to eventually buy shares for their next leg higher.
PCLN Stock Charts
For proper context, let’s look at the multiyear PCLN stock price chart, which shows a clear and well-defined uptrending channel since 2009. Priceline shares for the most part have oscillated up and down within the channel except from fall 2013 into late summer 2014, when PCLN overshot to the upside. However, that promptly led to a mean-reversion move back to the lower end of the channel (as it should).
Another way of looking at the price action in PCLN stock since early 2014 is by recognizing that the price action since then has been range-bound between about $1,000 on the downside and the $1,380 area on the upside. This certainly is a wide range, but it has kept PCLN stock from legging into a new major bull run as it consolidated the steep 2009-early 2014 rally.
All else being equal, this move is constructive, and that’s why I’m looking to buy Priceline stock upon its next dip lower in the broader market.
Closer-up on the daily chart, we see that PCLN stock’s 18-month sideways shuffle has its medium-term moving averages — including the red 200-day moving average — flat-lining. Nonetheless, Priceline stock has mostly held above this moving average since pushing back above it in February.
The August rally was simply too steep to have been able to sustain a pass over the 2014 highs, and so PCLN continues to consolidate below the black horizontal line and above the 200-day MA.
In the immediate term (and particularly this week), PCLN stock can go up, down or in circles. My plan is to buy Priceline stock upon the next corrective move in the S&P 500, where I hope to snap up some shares closer to the $1,150 area for a move that should see shares push well above $1,400 in the next six to 12 months, and thus into a new, more sustainable bull leg.
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Successful trading and investing starts with a plan. Download Serge’s essential trading plan, The Essence of Swing Trading e-book. As of this writing, he did not hold a position in any of the aforementioned securities.
