As trading ended Monday afternoon, shares of Priceline.com (NASDAQ: PCLN) had closed lower for four out of five trading days. The stock was oversold, trading at new, two-week lows, and looked to be finally “rolling over” after a rally to new, 52-week highs in the first half of April.
But what was truly remarkable about PCLN was the fact that the stock had also earned on Monday afternoon a two-point ratings upgrade from a neutral, 6 out of 10, to a “consider buying” 8 out of 10.
And buy they did! Shares of Priceline.com rallied by nearly 2% in Tuesday’s session, retracing much of the stock’s sharp drop on Monday, and leaving oversold territory behind for more neutral ground. With a positive edge of just under half a percent, PCLN could continue to move higher in Wednesday’s trading. Again, the stock is not anywhere near overbought levels, and given the strength of the broader market on Tuesday, it would not be unusual to find momentum traders looking for those stocks that appear most likely to press higher in the second half of the week.
With this strength in Priceline, it is hard not to look to competitor Expedia (NASDAQ: EXPE). And turning to EXPE reveals a stock that is still pulling back: down three in a row as of Tuesday’s close, and part of a larger, intermediate downtrend, that has taken the stock lower from new, 52-week highs reached in the second half of March.
The continued selling in Expedia has helped the stock earn a 7 out of 10 rating, one point below our “consider buying” level, and signalling a stock that may be worth keeping an eye on over the next few days. EXPE has finished oversold for the past two days in a row, its first such retreat in more than a month. In fact, the last time shares of Expedia sold off into oversold territory for two days in a row or more, the stock reversed to close higher for five out of the next six trading days, gaining more than seven and a half percent in the process.
For what it’s worth, shares of smaller rival Orbitz Worldwide (NYSE: OWW) traded higher for a second consecutive session on Tuesday, gaining nearly 1%. The stock has been in a trading range just above the 200-day moving average since late March.
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David Penn is Editor in Chief of TradingMarkets.com