Let’s talk shorting methodology on LinkedIn (LNKD)
Discussed in this article: LinkedIn ( $LNKD )
I want to look at LinkedIn ( NYSE:LNKD ) again. First of all, I’m not picking on this company; I’m not picking on this stock. I have talked about it being a good short several times and I’m just revisiting that for this reason, because this is more of an instructive video than a trading video. I wouldn’t short this stock right now, no way. On Thursday it had a turnaround, it was kind of an average volume day; the stock traded way down, I think below 180.00 and then closed near the high of the day. Well that was kind of a reversal day, that was an indication that this sell-off, three days, was over.
We get a similar thing here with this reversal pattern; similar things here with this reversal pattern here. So you see this, the reason I like this stock for a short is because it’s so consistent; I mean it really is consistent, so I wouldn’t short this stock now, do you know why? Because it doesn’t fit the pattern; this is the pattern, I want to see this stock bounce, I want to see this stock come up to the 50-day moving average and test that puppy, maybe 15 points from where it is right now; please Lord give me some good news on LinkedIn ( NYSE:LNKD ) because I don’t want to short this stock now.
What I want to do is wait for the stock to come up and not short it, but then wait for to roll over, then slap a short on there; not until it comes up and rolls over. So what I’m suggesting to you, this is a technique that you apply to any stock; any stock that’s just going straight down, don’t short that stock because the further it goes down the more pent-up demand there is for that stock, everybody’s just waiting for their turn, and their turn is going to come when the last dog is dead, when the last seller is sold, and that happens really sharp, and violent, and fast, so you don’t want to be shorting stocks on their way down; you want to short down trending stocks after they’ve come up and then rolled over.
So if this stock gets up to about $200.00 that’s when you want to short it. And you can say, “Well yes Dan, what if it keeps going?” Well, if I knew it was going to keep going then I would bet everything I had and short it, but that’s not the way this game is played. This game is played really kind of like; I’m not going to say percentages because that’s not really it. But you’ve just got a trade patterns, and right now the pattern is not to short this stock, that’s when you want to short the stock.