Tough lessons, re-entering Priceline(PCLN) – Blue Nile(NILE)

By: ispeculatornew
Date posted: 03.23.2009 (4:00 am) | Write a Comment  (1 Comment)

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pclnnileLast week, I had two trades go against me and I was hoping to be able to survive for the cutback but that was not meant to happen it seems. On Thursday’s close, i reached the stop loss on both trades and as confirmed Friday morning, closed back both positions. During Friday’s action, both positions came back and I would have made back 50% of the loss had I remained in the market but in trading (as I will wrote more about in the future), I believe discipline in closing trades is as much part of the success as is the trade in itself. And so sticking to my stops is not only important, but crucial in fact. It gives an opportunity to rethink about the situation with less emotion and determine if a trade still makes sense without the desire to simply go for a homerun.

And in this situation, I still think that Friday’s closed trade on Priceline vs Blue Nile makes sense. I did miss a part of Friday’s actiuon but I really do not see much downside from here. Blue Nile has not given much in terms of news that would indicate its recent surge is warranted. Priceline is under pressure because of Expedia’s recent promotion but as i have believed and have also read in research from Citi, the impact on Priceline’s bottom line is likely to be very limited.

On December 17th I entered this trade and made 30,46% while last week’s trade ended up losing 22,76%. I’m still up on this pair and no I am not stuck on this pair but simply find it a very interesting trade in these economic conditions.

You can refer to last week’s post about this trade here, much of the arguments I had then still stand.

In fact, the story is probably even more true on BlueNile as it was the top internet retailer in terms of stock performance last week, with not much to explain it as traffic is still down and its pricey items still look to be going through tough times with the economy in this recession/depression.

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1 Comment

  1. Comment by Finance Puzzle — March 29, 2009 @ 5:26 am

    Why are you pairing these two stocks? Doesn’t seem like there is a high level of cointegration with this pair to warrant the trade….If so, I don’t see it as a hedging bet

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