Generally when someone makes it blatently obvious that they are proud of something, like a peacock opening up its feathers. The term is used to state when someone is beginning to get annoyed at the person who is arrogantly proud.
Male 1: did you see how many girls I got with last night!?
Male2: Dude, they were all relatively ugly.
Male1: I could have slept with all of them if I wanted too.
Male2: Jesus christ, stop peacocking!
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