Park Place Entertainment (PPE)

Company. "Park Place Entertainment Corporation is one of the world's leading gaming companies. With $4.7 billion in annual net revenue, 29 properties in five countries on four continents, 29,000 hotel rooms, two million square feet of casino space and 54,000 employees, the Park Place portfolio is unequaled in the casino resort industry.... Park Place brands are among the most respected and best recognized in the world: Caesars, Paris, Bally's, Flamingo, Hilton and Grand Casinos." (company website)

Buy. Since April, PPE had traded in a fairly narrow channel between $7 and $7.50. At the beginning of June, it broke out and got all the way up to $8.80 before correcting back to $8.15 on June 23.

The following day, June 24, looked like a harbinger of good times to come: PPE opened much higher. The new price was sorely tested during the day, but closed a bit higher still, forming the hammer with the long tail. When it opened higher the following day, I bought.

Sell. PPE settled into a new trading channel between $8.50 and $9.10. It seemed reasonable to expect that at some point it would move up to a new plateau and perhaps repeat the whole pattern again. I was encouraged that the two up-days in September had both been on higher-than-average volume, which is supposed to be a good sign.

Yesterday, however, PPE broke the lower boundary of the channel and closed the day at $8.45, a down-day on the NYSE in general. This morning it opened even lower, and I decided to bail.

Looking back, I see that I had ignored two signs of impending trouble while focusing on the regular oscillation of the price in its channel.

First, the directional indicators turned mixed, at best, for the whole month of August. Although the selling line (red -DI) had moved above the buying line (green +DI), the trend line (ADX) wasn't showing much strength — more sidewise movement I must have thought.

Second, the 50-day moving average started to decline at the beginning of September, and I totally missed that. Until that time it had been climbing steeply. Ouch!

I can only hope that when I go to Las Vegas next month — and stay in one of PPE's hotels — I have better luck in PPE's casino's than I had with PPE's stock in the great casino on Wall Street!