As part of his "Mad Money" show Monday night Jim Cramer talked about travel stocks. I reviewed Expedia Inc. (EXPE) last week. As I wrote at the time, "Traders who bought the pullback into the gap should hold those position and raise sell stop protection to $127 from below $124. Aggressive traders could buy more EXPE on strength above $140. The $150-$155 area is our next intermediate-term price target." Expedia has been holding steady so far this month and now could be ready to strengthen again. Let's check the charts again.
In this daily bar chart of EXPE, below, we can see that prices are above the rising 50-day simple moving average line. The slower-to-react 200-day moving average line is starting to bottom/flatten out after months of decline. The daily On-Balance-Volume (OBV) line shows a rise from February and a minor high in late July as prices gapped higher. The OBV line is stable and easily could turn higher which would be a technical positive as it signals that buyers are being more aggressive. The daily Moving Average Convergence Divergence (MACD) oscillator is currently in a bearish set-up but could turn positive again if EXPE rallies from here.
This weekly bar chart of EXPE, below, shows some subtle improvement in the past week. The slope of the 40-week moving average line has turned positive. The weekly OBV line shows only a slight dip the past week or so and the MACD oscillator on this longer time frame is clearly bullish.
In this Point and Figure chart of EXPE, below, we can see that prices reached their $137 price target. A rally to $140 will be a new high for the move up and a bullish breakout.
Bottom line strategy: A trade at $140 will be a breakout on the Point and Figure chart, but strength above $135 on the bar chart might be just enough to start EXPE on its way higher.