Short PCLN...

After reading my last Friday's post I realize how far off I was in predicting the market. The SPX is at 1096 as I write this. Yet I am betting the index will not hit 1100 by the end of tomorrow. Crossing my fingers.

Also today I took on an early short vertical spread of PCLN. I sold a Aug 310/320 spread around the open and that was when PCLN went up, way up! It reached over $309 around noon. Yet as time progressed the stock begins dropping and is now below $298. I should be more patient with the price movement but I am comfortable for the option to expire at the end of Friday.

My reasons for believing that the stock would have trouble hitting through $310 are as follows:

1) Sentiment for the day seemed more neutral than directional. Since yesterday's big rally the market I assume would more likely consolidate then to move up again. This would be a bullish sign for the market overall. Hence I assume PCLN would not go up by much for then next 2 trading sessions.


2) The PCLN 50MA crossed over the 200MA. Being contrarian I saw it as bearish and expected more likely that PCLN will stall out.

3) The MACD has been neutral to slightly lower after 2 weeks but prices has moved up at least 20 points since. A sign of over priced in stock value.

Today I feel I got lucky with PCLN's outcome but wished I held my cash a little longer before go short. If I had held from short for about 3hours I would have doubled my unrealized profit today. Then again at noon time the market did not seem to be a good time to go short.