Discussed in this article: LinkedIn ( $LNKD )

Today I want to look at Linkedin ( $LNKD LinkedIn Corp ). Last week the company announced earnings and the market didn’t like them too much. You can see how the stock fell, massive volume on Friday.

I was looking at it on Friday, considering maybe picking up some stock, I have not, actually can’t say that I’ve ever been long this stock, I’d like to lie to you and say that I bought it sometime down here and sold it last week, but I’d pretty much be lying. I think that I have not traded this stock. However, I will probably not be able to say the same thing at this time tomorrow, because I’m looking at this stock and the way it stabilized; up .76 percent; after the fall that it’s had I don’t look at this as an up day, I think it’s just a stabilizing day. The 50-day moving average is holding, uptrend still very much intact. If this trend was in danger, if the stock was essentially done going up, you’d have seen a lot further drop closer to the 200-hundred day moving average.

So what my suggestion is, and this is what I’d be looking to do tomorrow, keep a stop below Friday’s intraday low, look to take some stock and as soon as you are involved in the stock zoom back out, look at the weekly chart, because this is really the trend you should care about. If you’re just always focused on the daily chart you’re going to get shaken out of the stock.

One other thing, when I buy this tomorrow I’m going to take a small position in this stock, I’m not the type of trader, and approaches vary, and if it works for you then you definitely don’t want to deviate from that; but I’m not the type that, quote, makes big bets. I don’t just look at this and say, “Okay, bam! This is my opportunity, I’m going in big.” And then watch and the stock goes to $200.00. Because I’m not sure about that, it’s speculation. You look here at the weekly chart. Does this look like a juicy chart? It really doesn’t to me; it looks kind of a little bit sloppy. You could say, “My gosh, this stock could fall like thirty points and there would still be nothing wrong with the uptrend.” Well, I’m not going to hold a stock that falls thirty points unless I happen upon Berkshire Hathaway A-shares, I’m just not going to do that. I would take a small position in the stock and then once I start getting a feel-good, once I start getting a sense that the stock is in fact moving higher, then I’d like to buy some more, even at $180.00.

A lot of times I get asked a question as far as, well when you talk about adding to positions, when do you add, is there a percentage or a point, or a time period, something like that? Honestly, there really isn’t. I don’t think that formulas like that lend themselves to effective trading, I think you want to make discretionary decisions based on some subjective feeling that you have. So in this case, for me, the stocks at $176-$177.00, if the stock starts trading up above $180.00 that’s when I would want to add to the position, because I’d feel confident that this level was going to hold. So I want to take a bigger position, but I’m just not going to buy a falling knife and so if the stock falls below this level then I don’t want to add to the position, I’ll be happy that I have just a small position. If the stock rises above $180.00 then I’ll add some more and I’ll be happy with that, I won’t be saying, “Oh my gosh, I should have bought more at $177.00. No, my trade was take a small position at this level and add at $180.00. If I’m not comfortable with that trade then I shouldn’t be planning to make that trade.