August 10, 2012 - Priceline.com Risk/Yield Update for 2012
Priceline.com announced it's earnings a few days ago and promptly dropped about 100 points. There are various articles (see article) as to whether Priceline.com had reasonable earnings and investors got spooked or whether there are some dark clouds on the horizon that warrant another look at this company.
In our earlier article with graphs from April 26, 2012 (listed below), Priceline.com had some positive configurations which resulted in Delta Core having a momentum move into Yield from June to August. This movement was evident on the PCLN 2012 Delta Core/Transient graph provided with the article. The article also noted issues would likely arise in the fall period as was evident from Delta Core moving into risk at the October 2012 period.
In this case, the momentum into Yield occurred from the June 1st (price = 610.50 at close) and continued until July 2nd (price = 680.86 at close). If a 10% increase was the desired result, then the trade could have been finished on June 19, 2012 with a price of 680.11 at close. Once the peak shown on the PCLN 2012 Delta Core/transient graph ends, as this one did on August 1st and starts a downward movement, it's probably time to reconsider whether the trade should be kept on. In some cases a peak may end and the Delta Core stays in yield but, in this case, the peak ended and the Delta Core movement is down into risk.
Also, it's important to note what is happening with the USA economy and the Global economy at times where there is yield or risk momentum for a particular company. For example, the 4/15 to 5/15/2012 Core move into Yield for Priceline occurred at a point in time when the global core was moving into risk - probably not particular a good time to pick an "up" movement in a stock to trade - better to pick a stock with a down moving momentum like DECK which had a risk movement peaking at about 5/15/2012 which is shown on the DECK 2012 Delta Core/Transient graph (see article). Note that the Delta Core movement into risk in the fall shown on the PCLN 2012 Delta Core/Transient graph may be somewhat mitigated by an expected upward surge in the USA economy. With that in mind, this stock could stabilize or more likely, any issues that arise with future earnings may simply be discounted by the market.
Note, the PCLN 2012 Risk/Yield graph has been updated and provided for this article. The algorithm for producing the graphs has been modified slightly but, in most cases has a negligible effect on outcomes. The graphs are also being provided in color to help distinguish the different characteristics.
April 26, 2012 -- Priceline.com Risk/Yield for 2012
Priceline.com is expected to announce its earnings in early May and from the astrological configurations, the momentum for this company is moving into "yield" during that period and staying there through the summer period. Note, this period does have a brief downward shift in June. This is not to say that the stock price will increase as the "yield" momentum in May is barely over 200 (black line) although, there is a surge later in the year but, it is building on a previous momentum. There is also a movement into "yield" of the "transient" data points (green line) in the July period which bears further watching.
One point that the astrological configuration does highlight is that the company has shifted direction in how it offers it's products. Previously, this company was known for customers putting in a price that they wanted to pay and then it would be up to a vendor to fill it. The recent changes that this company has made to its products make them aligned with the rest of the industry where the best prices are negotiated beforehand and those are provided to the consumer (read press release). This seems to mean that the spokesman (William Shatner) will either not be used or used much less and it's hard to tell whether this is a positive or negative change - after all, this person has been a very recognizable spokesperson for the company.
There are some indications that there may either be a restructuring or a reduction in force (or both) around the summer period as new processes are implemented/changed to fit the revised products. During this same period, I would expect that investors would see the company as having plenty of opportunities to increase business.
As the economy continues stabilizing, demand for travel is likely to steadily increase from both businesses and consumers which bodes well for Priceline.com and competitors.
The 2012 fall period may present some challenges for Priceline.com and we'll look at those later in the year ....
Priceline.com Delta Core/Transient 2012 graph
Priceline.com Risk/Yield 2012 graph
Disclosure as of 4/26/2012 - Priceline.com (PCLN) is not part of our portfolio at this time.
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