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CANSLIM Case Study: Priceline (PCLN), Feb. 2009 - Present

CANSLIM Case Study: Priceline.com (PCLN), Feb. 2009 - Present. Daniel Cunza Manhattan IBD Meetup Nov. 18, 2009. Initial Buy Point Conditions. Buy point established on Jun. 9, 2009 at $119.24 (day’s high plus $0.10). This was the high of a 5-week high/tight flag pattern.

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CANSLIM Case Study: Priceline (PCLN), Feb. 2009 - Present

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  1. CANSLIM Case Study: Priceline.com (PCLN), Feb. 2009 - Present Daniel Cunza Manhattan IBD Meetup Nov. 18, 2009

  2. Initial Buy Point Conditions • Buy point established on Jun. 9, 2009 at $119.24 (day’s high plus $0.10). • This was the high of a 5-week high/tight flag pattern. • 119.24 was hit on 20-Jul. but two problems: (1) volume was below 50-SMA, (2) day’s closing price was below buy point. • At least a 40% rise in daily volume is preferred, with a closing price above the buy point. • It DID close the week above buy point (good), BUT on below 10-SMA volume (bad). Daniel Cunza Manhattan IBD Meetup/Nov. 2009

  3. Priceline.com (PCLN): 1-Yr Daily Chart (through Nov. 17, 2009) Daniel Cunza Manhattan IBD Meetup/Nov. 2009

  4. Priceline.com (PCLN): 1-Yr Weekly Chart (through Nov. 17, 2009) Daniel Cunza Manhattan IBD Meetup/Nov. 2009

  5. Initial Buy Point Conditions (cont’d) • On 20-Jul., PCLN had most of the CANSLIM signature requirements: EPS>=80, RS>=80, Acc/Dis >=B-, Industry Group Rank in top 24%, etc. • Note: There may have been a prior base between late Feb. and late Mar. • Questions: Was that a valid base? Would it count as the 1st stage-base, even though we were still inside a bear market, before the confirmation day of 12-Mar.? No; base counts do not apply to bases formed during bear market conditions. Daniel Cunza Manhattan IBD Meetup/Nov. 2009

  6. To sell or not to sell • According to How to Make Money in Stocks, 4th ed., stocks that rise 20% within 3 weeks of breakout from a valid buy point, should be held for at least 8 weeks, before further analysis. • PCLN hit 119.24*1.2=143.09 on 10-Aug., EXACTLY 3 weeks after 20-Jul. • Therefore do NOT take 20% profit, yet. Daniel Cunza Manhattan IBD Meetup/Nov. 2009

  7. 2nd-Stage Base • A new buy point was established 30-Sep. at 170.51, the high of a 3-week flat/tight pattern (plus 0.10). • This pattern was cleared on 6-Oct., but barely on above-average (50-SMA) volume. • PCLN also closed the week above the buy point, but on below 10-SMA volume. Daniel Cunza Manhattan IBD Meetup/Nov. 2009

  8. Failure! • IBD declares “market in correction” at close of 27-Oct. PCLN closes at 171.98 (a mere 0.9% gain off last buy point). • PCLN opens at 170.51 on 28-Oct. • PCLN loses 8% of 170.51 buy point on intraday 30-Oct. (Note: market will be in “correction” through close of 9-Nov.). • Questions: When to sell? WHAT to sell? Daniel Cunza Manhattan IBD Meetup/Nov. 2009

  9. More Questions for Discussion • Low of previous “base” was undercut on 30-Oct.: • Does the base count reset? Yes. • Is the 170.51 buy point still valid after market uptrend resumes after the close of 9-Nov.? • Do you buy on 5-Nov. off the bounce of 50-SMA on high volume, even while a market correction is still in place? Daniel Cunza Manhattan IBD Meetup/Nov. 2009

  10. THANK YOU FOR YOUR ATTENTION Daniel Cunza Manhattan IBD Meetup/Nov. 2009

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