Diary of an IPO – LinkedIn Technically Speaking

LinkedIn (ticker: $LNKD) IPO’d today and caught the attention of many traders. I heard a lot of chatter about how horrible the investment bankers were with pricing the deal with the first trade was over 80% above the offer price. As it climbed like the space shuttle lifting off I heard about how ridiculous the price rise was. The valuation was enormous for a company with little revenue and no profit. There were questions about when there would be options available or when it could be shorted.

To a Market Technician an IPO is something to avoid. There is no price history so no analysis can be used to determine entries and exits. All I could do was watch, until 11:49, when it peaked at 122.70. You could sense the peak coming with the Relative Strength Index getting over 90 on a 1 minute chart, but until it turned there was little history. A retest and break of the initial move to 92.50 (point A on chart below) and a few Measured Moves (MM) higher, points B and C. As it fell off of 122.70 though, at point D, it was time for the natural flow of the Fibonacci’s to take over. Here is what happened for the rest of the day.

E. 50% retracement Fibonacci level and Arc hold and it moves higher.

F. Rises over the 38.2% Fibonacci level and consolidates between it and 108 MM level.

G. Moves higher and stalls at 23.6% Fibonacci level.

H. Runs lower in a descending triangle with the 38.2% Fibonacci level as a base until it hits the Fibonacci Arc where it bounces before testing support again.

I. Breaks the descending triangle lower through the 38.2% Fibonacci level and runs lower to ten next Fibonacci Arc.

J. After retesting the 38.2% Fibonacci level from below and falling back it finds support at the Fibonacci Arc and rides the Arc higher to the 38.2% level again.

K. Another rejection of the 38.2% Fibonacci, now forming an ascending triangle.

L. Breaks through the ascending triangle higher over the 38.2% Fibonacci on third try.

M. After two retests of the 38.2% level from above it breaks below and runs to the previous low of the triangle near I and just above the 50% Fibonacci level.

N. As it passes through the intersection of the 50% Fibonacci and the Fibonacci Arc is loses support and drops lower.

O. Overshooting the 61.8% Fibonacci level it retests it from below.

P. As it rises it meets the downtrend resistance and rejects lower through the 61.8% Fibonacci to the low again at O.

Q. Holding the low, it moves higher and stalls at the 61.8% Fibonacci before rising and then retesting it only to break through again later.

R. The double bottom becomes a triple bottom as support.

S. Breaking support it retests the initial breakout level from A and then moves higher.

T. Closes at the retest of the triple bottom.

20 significant points and 12 were governed by Fibonacci levels Arc and Fans.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

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