Expedia has fallen from the early highs but remains above key support. For bullish Expedia investors, this fade has dropped the stock back down to a low-risk entry zone.
Following the ugly breakdown gap that opened January, Expedia entered a full on breakdown phase. The stock sliced through multiple layers of support as it dropped over 27% before bottoming in early February. Expedia reached a deeply oversold reading in its daily moving average convergence/divergence indicator at last month's low. The stock was set up well for a healthy recovery, and after reaching $88.50, the Expedia quickly reversed to the upside. A little over week later, the stock had recovered two-thirds of the January breakdown.
After the bounce off the February low stalled at the declining 50-day moving average, Expedia has been consolidating in a narrow range. During this process, the underlying support has been strengthening. This improved setup should provide the stock the footing needed to extend this morning's breakout.
In the near term, Expedia bulls should consider the stock a buy between $108 and $104. This support zone includes today's upside gap as well as the 50-day moving average. On the downside, a close back below $102.85 would take out the March lows, indicating that today's news inspired rally has failed.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.