NEW BEARISH Plays
Expedia Inc. - EXPE - close: 22.77 change: +0.25 stop: 23.55
Why We Like It:
Rival online travel merchant Priceline.com (PCLN) reported earnings today that were significantly better than expected. Not only did PCLN beat on the top and bottom lines but they raised their third quarter guidance. This sent shares of PCLN soaring to new 9-year highs. Shares of EXPE only gained 1% on the news. Of course EXPE already looks extremely overbought with a nearly non-stop rally from its July lows near $13.50. EXPE had its own post-earnings post back on July 30th.
I suspect that all the good news is already baked into these stock prices. EXPE has already reported. PCLN has reported and raised guidance. What catalyst is left to drive these stocks higher? Eventually the rally, or the short covering, will run out. That is what a lot of this rally has been about. Both PCLN and EXPE had above average short interest but PCLN's was around 22% versus EXPE's 9% of the float (number of shares available for trading).
I am suggesting that readers use a trigger to open bearish positions (short positions or buy put options) at $21.85. If triggered our first target is $19.75. Our second target is $18.00. This should be considered a very aggressive trade so I suggest smaller than normal position sizes.
Entry on August xx at $xx.xx <-- TRIGGER 21.85
Change since picked: + 0.00
Earnings Date 10/29/09 (unconfirmed)
Average Daily Volume: 5.0 million
Listed on August 10, 2009