PCLN outperforms in the holiday-shortened week, while UAL lags
As we approach a long holiday weekend on Wall Street, Schaeffer's Senior Quantitative Analyst Rocky White ran the numbers to find out which S&P 500 Index (SPX) components tend to fare the best -- and worst -- during the post-Presidents Day trading week. Among the names with notable mid-February returns are travel sector cohorts Priceline Group Inc (NASDAQ:PCLN) and United Continental Holdings Inc (NYSE:UAL), with PCLN delivering outsized gains and UAL landing near the lowest rung on the ladder.
Priceline Stock Looks Set to Pop Post-Presidents Day
Specifically, over the past 10 years, online reservation service PCLN has averaged an impressive gain of 6.43% during the four-day week following Presidents Day -- the biggest average gain of any SPX component over this time frame. What's more, the stock has ended the week higher 80% of the time.
Heading into this seasonally bullish stretch, PCLN is fresh off a successful test of its 80-week moving average, which has provided key support over the past two years. There's also potential options-related support in play, as evidenced by the gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 1.46 -- which indicates that puts comfortably outnumber calls among near-the-money options set to expire within three months.
At last check, PCLN is up 1.1% at $1,817.28. An "average" rally of 6.43% from here would place the shares north of $1,934 by the end of next week.
United Stock Eyes More Short-Term Downside
On the other hand, UAL has averaged a drop of 4.95% the week of Presidents Day, with seven of the last 10 returns being negative. A decline next week would simply extend the recently bearish price action for UAL -- which gapped sharply lower in late January on the heels of a poorly received earnings report, and is now down 2.2% year-to-date to trade at $65.95.
That post-earnings bear gap smacked UAL below its 20-day moving average, and this short-term trendline just completed a bearish cross with its 200-day counterpart. This technical formation effectively confirms the stock's downward momentum, and creates a formidable hurdle in the overhead $68 region.
Meanwhile, short sellers are piling on. Short interest on UAL rose by 50% over the past two reporting periods, and a continuation of this short-selling activity could translate into continued headwinds for the struggling stock. Based on the equity's current price, an "average" Presidents Day week would place UAL around $62.69 by next Friday.