Skip to main content

NEW YORK ( TheStreet) -- With consumer confidence hitting a three-year high, Priceline (PCLN) is set to report its earnings tonight after the closing bell.

Priceline is an online travel company operating both domestically and internationally. It has been hitting on all cylinders because the economy has been bad. It is the low-cost alternative in travel arrangements.

Recent earnings from consumer-oriented stocks have been generally strong with

Home Depot

(HD) - Get Home Depot, Inc. Report

being the most recent. Stock prices have appreciated as a result. Discount retailer


(WMT) - Get Walmart Inc. Report

, on the other hand, yesterday reported disappointing sales.

Will the Internet travel discounter, Priceline, be more like Wal-Mart or Home Depot? To try and answer that question, I do what I always do and that is to take a long look at the charts.

On the short-term time frame, the bar of significance is from Jan. 5, 2011. Volume there registered at 2.4 million shares and that is the anchor for support.

Yesterday, with pressure on the general market, Priceline traded back into that bar and closed inside the bar. When price trades into a support bar and stays there, it generally seeks the other side. That price point is $410.64.

TheStreet Recommends

If you pull the chart back a bit and examine the intermediate-term time frame, there you can see support zones at the current price level and again starting at just over $400. These two clearly defined support zones are anchored by the two high-volume, wide-price spread bars from the week of Nov. 8, 2010 and Jan. 3, 2011.

Those two supports zones are critical to a continued climb in Priceline's share price. They are the places to consider adding to or starting a new position because they represent the price point where risk is least and reward is greatest.

When I consider both time frames, it makes me think that Priceline is probably going to witness more selling pressure either as a result of earnings or today in front of earnings. If it comes in front of earnings, then a speculative purchase can be made prior to the report. Otherwise, I would wait on earnings and consider buying weakness tomorrow if volume is light. As a potential buyer, I would prefer the latter scenario because the headline risk can be avoided.

Priceline is bullish on both the short- and intermediate-term time frames as is the retail sector. I do not expect it to break support and would be a buyer if its earnings push it lower but on lighter volume.

Thanks for reading. Until next time, just keep trading the charts!

At the time of publication, Little had no position in the stocks mentioned,

L.A. Little, author, professional trader and money manager, writes daily on

, a free educational site for traders and investors. He has been featured in numerous publications and is the author of

Trade Like The Little Guy


His background includes degrees in philosophy, computer science, computer information systems and telecommunications. With a trading philosophy centered on capital protection first and the accumulation of consistent gains over time, L.A. espouses a simplistic technical approach to trading the markets that is a throwback to the days of past. With a focus on swing points and the qualification of trends, L.A. provides a breath of fresh air to an otherwise crowded room of derivative indicators with the emphasis on technical minutiae.