Editor’s note: Serge Berger, the head trader and investment strategist for The Steady Trader, will be providing the Trade of the Day until Sam Collins returns on June 27.
Expedia (NASDAQ: EXPE) – The online travel company came on my radar yesterday morning, as I detected a bullish flag formation that seems to want to break higher. I often keep an eye on this stock as historically it has traded well technically and shown decent respect to its 50-day and 200-day moving averages.
The firm owns Expedia.com, Hotels.com, Hotwire.com, TripAdvisor and other sites that provide online services for business and leisure travelers. While my reasoning behind this trade is mostly technical, it is noteworthy that the U.S. travel industry has come back to life, and recent reports indicate a pickup in the past two years in everything from domestic airline passenger miles flown to hotel room bookings.
EXPE has held up remarkably well during the past three weeks during the broader market sell-off. The stock is up around 9.5% while the SPDR S&P 500 (NYSE: SPY) is down about 4% since May 17. On May 18, EXPE broke out and above of a five-and-a-half-month downtrend line on respectable volume.
Then, after consolidating for three weeks, the stock bounced on June 8, and yesterday broke out and above a bullish wedge. This now gives us a setup to the long side with a stop at $26.60 and a final profit target at $29.
Yesterday’s volume leaves something to be desired and this setup is generally not my highest conviction trade given that, in my opinion, we still have unfinished business on the downside in the broader market. Nevertheless, EXPE is a technically viable long setup and the defined stop and profit orders will over time give this type of pattern a positive win factor.
