Priceline (PCLN) has been on the decline since its impressive gap on positive earnings back on Aug. 5. With a pullback of more than 7% from top to bottom, the gap was finally filled last Friday as the stock tested $1,280.
Look at this daily chart.
You can see how the stock has stalled repeatedly at around $1,280 over the past several months. But when earnings came in above expectations, the stock jumped right through that level and presented a good shorting opportunity under the "too far, too fast" theory of trading. After PCLN closed near the low of the day on Aug. 5 -- but still well outside the upper Bollinger Band -- the stock continued to drift lower, closing below the open for seven consecutive days.
This type of pattern can be revealing when trying to find the bottom of a decline. Once you start seeing some closes that are higher than the open, you'll have a bit more confidence that selling pressure is waning and buyers are starting to step in.
That's what seems to be happening with Priceline today, though there is still plenty of time in the trading day for the stock to reverse. But as long as PCLN closes above $1,280 today, I want to be long.