A Key Decision on LinkedIn

 | Jun 13, 2014 | 9:00 AM EDT
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We have seen a nice rally in LinkedIn (LNKD) since we saw a counter-trend setup illustrated on the weekly chart below. The reason why we considered this counter-trend buy had a lot to do with the symmetry we saw with the prior declines into the low made in May. There were also timing parameters that overlapped the test of this key support. Notice on the weekly chart that many of the declining swings were very similar. Note the decline of $44.06 and $45.66. These were very similar to the decline into the low of $44.94. If you look at the chart below you can see the pattern.

Now that we've seen a rally of $31.23 from the recent low, it's time for another key decision in this stock that is essentially identified using the same concept I used to help define the support by reversing the process. Bottom line, if the rally in LNKD is going to continue, it needs to clear this rather healthy hurdle on the upside that comes from the symmetry projections (aka measured moves) on the next weekly chart.  


LinkedIn (LNKD) -- Weekly
Source: Dynamic Trader


Notice on the second weekly chart I have labeled a lot of the prior rally swings. You can see that many of these are similar.


LinkedIn (LNKD) -- Weekly 2
Source: Dynamic Trader


The swings prior to the most recent one were anywhere from $31.17-$40.16. The recent rally so far has been $31.23, which is very similar to some of these prior rally swings! For this reason, we have to watch for a possible failure in this stock from the $167.19-$176.18 area. At least it's a great time to really start trailing up stops if you are long. This is the way I have to look at this: if the May low is more important in the bigger picture, we need to see the resistance projected from these symmetrical moves cleared on the upside. 

If we can clear this zone by a decent margin (at least $4 or $5), then it will suggest at least another $30-$40 to the upside eventually. A failure to clear this same key zone instead says the downtrend that we've seen since Sept 2013 could resume.  

Remember to take this work from one decision to the next! I also include a daily chart that shows the next key support decision. This decision is only valid however if we don't take out the recent highs. Let's see what LNKD does against this key decision and trade accordingly.


LinkedIn (LNKD) -- Daily
Source: Dynamic Trader

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