LinkedIn Looks to Challenge Looming Resistance
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LinkedIn (LNKD) shares hit a high in the $120 area after their May 2011 IPO. Note how two subsequent lows occurred around $60 -- the half-high following its debut. $120, which is double the lows and site of the May 2011 and May 2012 highs, has generally marked the upper boundary. But what about the brief surge though $120 last month? Anyone paying attention to year-to-date gains might have been wary of buying LNKD even at this time, as $126 marks a 100% YTD gain, since the shares closed at $63.01 on the last trading day of 2011.LNKD is still heavily shorted (see second pane in the chart), and eventually we think this $120-$126 speed bump will be taken out. However, it would behoove those with a short-term time frame to be aware of the double-low and 100% YTD gain resistance.
One other thing to worry about in the near term is the fact that LNKD's 10- and 20-day moving averages are about to complete a bearish cross. This could be another sign of near-term trouble.
The 120-, 125-, and 130-strike prices have a large number of calls for the October series, which may also contribute to the speed bump Todd mentioned.
LNKD's Equity VIX level coming off lows of the year and has a clear-cut earnings-related bias with implied volatilities spiking to the upside. Appears suited for the straddle/strangle players.
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