What Do Texas Grease and PCLN Have In Common?

By -

In the laboratory and test kitchens here at TFP, we have been having some fun with volatility.  One of our latest studies focuses on statistically prominent inflections in order flow.  A favorite setup for light, sweet, and sometimes crude oil is the Sunday Night Snapout – a nice surge right as the globex session opens on Sunday evenings after squeezing shorts the preceding week.

sns

The setup works something like this:

  1. Wait for a surprisingly bullish week that continually takes shorts to the cleaners (preferably capping Friday off with a bullish spasm).  We had one of these in WTI oil (CL futures) last week.
  2. Watch for a nice order flow surge right at Sunday night’s globex open.  Unfortunately, this involves weak holders still short from Friday hoping and sweating that Sunday must close lower.
  3. Enter shorts anywhere between the middle and highs of the offending 5-minute price candle.
  4. Place stops above those offending globex candle highs (5-min or even 15-min candles work best).
  5. Place targets at Friday’s interim swing highs BEFORE the breakout.
  6. Lather, rinse, repeat.

Of course, there are no guarantees, but this setup can offer some compelling risk:reward setups for those who can assess and manage risk.

PCLN: A Similar Trajectory?

We couldn’t help but notice Morgan Stanley’s price target of $1,000 for Priceline on Bloomberg today.  Now, let’s be clear.  It’s very possible PCLN will hit $1,000 soon and for all we know, the mavens at Morgan Stanley are geniuses and are to be congratulated.  Or, maybe they’ve been long for months and now just need a good little boost to get out.

Either way, we can’t help but reminisce in a fun game of Jeopardy!  QCOM, AAPL – famous $1,000 price targets for $1,000, please.

Another cool study from our test labs shows some nifty context for today’s PCLN price blast.  By taking an adaptive smoothing algorithm and wrapping a pair of ATR bands around it, we form an interesting PCLN alternate price target:

pcln