It's clear that the rally that unfolded on the heels of PCLN's last earnings report was a combination of short covering and squeezing. Back then, I published chart 1 below, referring to the post-earnings one-day spike as the "I want my money back" trade.


Chart 1. The post-earnings spike ran into a wall of resistance.

Since then, the stock traced out a 5-wave decline (chart 2) that ended in late November, giving way to a countertrend rally. In my opinion, while it's possible for the stock to continue barreling higher toward $495 - $510 ahead of the next earnings report, the next major move will likely be to the downside.


Chart 2. The current rally off the late-November low was preceded by a 5-wave decline. I expect another
5-wave decline to begin in the coming days and weeks.

Prior to this gloomy forecast, my outlook for PCLN was much brighter, as illustrated in chart 3 below.  This doesn't mean that another down leg would invalidate the long-term bullish prospect; it simply means that wave 4 is still unfolding and will likely not end until the mid 300's is reached.



Chart 3. PCLN's long-term picture remains bright, but further degradation is to be expected in the coming 
weeks and months. 

Trade Well,

Peter