LinkedIn (LNKD) — time to turn this trade around. (June 13, 2014)
Look, LinkedIn ( NYSE:LNKD ), as you know if you’ve been looking at these Free Chart videos, LinkedIn ( NYSE:LNKD ) has been one of my favorite shorts because it’s been so predictable since it really broke down through the 50-day moving average and then ultimately really started flopping below it. Every time the stock had moved up to the 50, you short the stock, with a buy stop, and then you cover it when it would get to an extreme; then back up to the 50 and you start watching it for a sign of weakness like you got there and then you’d put a buy stop just above the peak.
Same thing here; the stock gets down to an extreme you cover your short, it didn’t even get up to the 50-day moving average so maybe you short maybe, maybe you don’t here. It’s always easy for me to say exactly what would have been the right move, when you’re looking at history it’s amazing how easy it is; it’s kind of like armchair quarterbacking. But the bottom line is you sure wouldn’t be buying.
Well I’m looking at this now after this kind of a sell-off, I’ll call it kind of a crescendo low here where the stock fell on heavier than average volume and since that time has kind of been drifting up; a test of the 50 where it’s always failed before, and a little pullback. So it’s like, “Okay the 50-day moving average failed again.” The stock didn’t go down that much, so it didn’t have to move up that much to break through the 50-day moving average. Okay, I’ll say it, I think this is a buy now, I think if you’re short this stock you are wrong. I think this is a buy now and I think support is probably somewhere around here.
So what I would suggest doing here on this is playing the bounce play. You see the extreme, you play the bounce, up through resistance so you keep your stop; initially it’s a pretty loose stop, right here, maybe you keep it a little bit below the 50-day moving average, but you take a small position and risk the stock running away from you; or you just wait for the stock to come back down into the low 160.00s, any where between 160.00 and 165.00, somewhere there, find some support and that’s when you buy before it does this. That’s how I would be trading LinkedIn ( NYSE:LNKD ), it’s been a heck of a short, you’re done being short now; now if you want to continue to trade this stock you trade it from the long side.
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