A Key Decision on LinkedIn

 | Jun 13, 2014 | 9:00 AM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

lnkd

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

Columnist Conversations

I set you up for the trading Week Ahead from the floor of the NYSE with Peter Costa of Empire Executions... Ha...
LNKD is trading $226.08, up 3.1% with IV30™ up 0.4%. This is a stock price and volatility note on a so...
From Moody's: "Dynegy announced that it expects to finance the transaction with $5 billion of unsecured notes ...
Kohl's is beginning to lose its upside momentum this week. The stock has been in hyper drive since the ...

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.