Chart of the Day – PCLN Impulsing Lower

by Enis October 11, 2012 11:53 am • Commentary

I mentioned the weakness in large cap tech in my Macro Wrap post yesterday morning.  It’s the time of year when portfolio managers re-adjust their portfolios and trim winners and rebalance losers.  The major tech winners of the last few years seem to be the targets of such selling since the beginning of October.  AAPL has been well documented, but I wanted to look at the 10 day price action in PCLN to illustrate the nature of this selling.

Here is the 10 intraday chart of PCLN (basically since the start of October):



So in the past 5 days, including today, we’ve seen a 15-20 dollar turnaround from open to 11am in PCLN.  That’s been on big volume, indicating aggressive selling, on very little news.  Those pops have been on big market gaps higher on Oct 5th and today, but clearly institutional investors are distributing PCLN on each subsequent pop.

In fact, large cap tech names in the past 2 weeks have often seen morning strength give way to weakness later in the day.  AAPL has been exhibit A, but AMZN has started to exhibit similar price action, again indicating institutional traders who have sell orders spread out over the course of the day, no matter the broader market’s price action.

At the end of the day, markets move on the incremental buyer or seller.  Large cap tech seems to have more incremental sellers than buyers at these prices, and that’s a better explanation than 90% of the headlines that you’ll read about this price action.