Get Your Hooks in LinkedIn

 | Jun 09, 2013 | 12:30 PM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

lnkd

The name of the game is not always being right. That's just not realistic. It's more about having a plan, defining your risk and having a reason to place a bet or enter a given stock.

With that in mind, let's make the case for the buy side in LinkedIn (LNKD), starting with the daily chart -- and with Fibonacci price analysis. The stock's recent low was made at the confluence of four key price relationships: a 0.382 retracement of one swing, a 1.618 extension of two other swings and a 100% projection of a prior declining swing.

LinkedIn (LNKD) -- Daily
Source: Dynamic Trader

That last projection is illustrated on the daily chart below: The stock declined $32.04 from the May 2 high into the May 10 low, and in the second swing -- from the May 15 high to the June 5 low -- it sank a very similar $32.36. I call this "symmetry" in price action: similarity or equality when comparing swings in the same direction.

Now, I am also seeing some key Fibonacci time-based parameters. As you can see on the chart, the cluster of timing relationships came in between May 31 and June 7 -- in other words, this date range marks a point within the current decline when other recent pullbacks have tended to end. When a stock is trading lower into a time cluster, that tells you to look for a possible reversal back upward. For the most recent decline, the low -- so far -- came on June 5, directly within this cluster.

LinkedIn (LNKD) -- Daily (Time Cycles)
Source: Dynamic Trader

The above chart highlights this time symmetry: As seen above, two prior pullbacks lasted 20 trading days, and one lasted a similar 25 days. This most recent low marked a comparable 23 sessions into the recent decline, which I like.

LinkedIn (LNKD) -- 30-Second
Source: Dynamic Trader

We've already seen a buy trigger fire off, which I've illustrated in the third chart. This indicates that it's worth placing a buy-side bet on LinkedIn against the most recent low. If the price continues to hold above that June 5 low, the upside potential is to the $214.53 area. On the other hand, if that low is taken out, I will consider myself wrong in the trade.

For more information about trade triggers, please refer here.

Columnist Conversations

It was a quiet start to the week, in as much as the broader market was concerned. With only three trading day...
Market closes flat as oil & commodities take hit today on back of stronger dollar...something that could c...
Latest PAYX/IHS Small Business Jobs Index released today...Mountain region and Texas metro continue to lead th...
So far, this one has held the pullback to the key low. You can have a stop either below the pullback low at 3...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.