Expedia (EXPE) Looking Solid

14/06/2011 Uncategorized  No comments

expe short term

Expedia, Inc. (EXPE) came on my radar this morning as I detected a bullish flag formation that seems to want to break higher.  I often keep an eye on this stock as historically it has traded well technically and showed decent respect to its 50 and 200 day moving averages.

The firm owns expedia.com, hotels.com, hotwire.com, Tripadvisor and others and as such provides online travel services for business travelers and leisure travelers.  While my look at this trade here is mostly technical, it is noteworthy that the U.S. travel industry has come back to live and recent reports indicate a pickup over the past two years in everything from domestic airline passenger miles flown to hotel room bookings. 

Also interesting is how well EXPE held up over the past three weeks during the broader market sell-off;

EXPE is up around 9.50% while the S&P 500 (SPY) is down about 4% since May 17.

On May 18th EXPE broke out and above of a 5.5 month downtrend line on respectable volume. 

Then, after consolidating for three weeks the stock bounced on June 8th and yesterday broke out and above a bullish wedge.  This now gives us a setup to the long side with stops at 26.60 and a final profit target at $29.    

Yesterday’s volume leaves something left to be desired for and this setup is generally not my highest conviction trade given that in my opinion we still have unfinished business on the downside in the broader market.  Never the less, the setup here in EXPE is a technically viable long setup and the defined stop and profit orders will over time give this type of pattern a positive win factor.

Happy Trading

Serge

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